<PAGE> 1
As filed with the Securities and Exchange Commission on May 20, 1997
Registration No. 333-24435
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
ROCKDALE NATIONAL BANCSHARES, INC.
(Name of small business issuer in its charter)
----------------------
GEORGIA 6712 58-2292563
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification
incorporation or Code Number) Number)
organization) ----------------------
P. O. BOX 82030
CONYERS, GEORGIA 30208
(770) 760-7573
(Address and telephone number
of principal executive offices)
----------------------
WILLIAM L. DANIEL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
P.O. BOX 82030
CONYERS, GEORGIA 30208
(770) 760-7573
(Name, address and telephone number
of agent for service)
----------------------
Copies Requested to:
ROBERT C. SCHWARTZ, ESQ.
Smith, Gambrell & Russell
Suite 1800
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326
(404) 264-2658
----------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
================================================================================
<PAGE> 2
610,000 SHARES (MINIMUM)
800,000 SHARES (MAXIMUM)
COMMON STOCK
ROCKDALE NATIONAL BANCSHARES, INC.
A PROPOSED BANK HOLDING COMPANY FOR
ROCKDALE NATIONAL BANK, CONYERS, GEORGIA
A PROPOSED NATIONAL BANK
Rockdale National Bancshares, Inc., a Georgia corporation (the
"Company"), hereby offers for sale a minimum of 610,000 shares and a maximum of
800,000 shares of its common stock, $1.00 par value per share (the "Common
Stock"), at an offering price of $10.00 per share. The shares are offered on a
best-efforts, 610,000 share minimum basis by certain directors and executive
officers of the Company, who will receive no commissions for such sales.
The minimum subscription amount is 100 shares and once a subscription is
accepted by the Company, it cannot be withdrawn by the subscriber. The
offering, unless extended, will be terminated and all subscription funds,
together with any interest earned thereon, promptly returned if 610,000 shares
have not been subscribed by ______________, 1997. The Company may extend the
offering for three consecutive 90-day periods without notice to subscribers.
Subscriptions obtained in the offering may be accepted or rejected in whole or
in part by the Company for any reason. See "TERMS OF THE OFFERING."
All subscription funds tendered prior to fulfillment of the Offering
Conditions (as defined herein) will be deposited in an interest-bearing escrow
account with The Bankers Bank (the "Escrow Agent") pending satisfaction of the
Offering Conditions or termination or cancellation of the offering prior to the
satisfaction of the Offering Conditions. If the Offering Conditions are not
satisfied, all subscription funds that have been placed with the Escrow Agent
will be returned, together with any interest earned thereon, promptly to
subscribers. Once all Offering Conditions are met, the Escrow Agent will
release all subscription funds, and any profits thereon, to the Company. The
subscription funds of any person who subscribes for shares following
satisfaction of the Offering Conditions will not be placed in escrow, but will
be immediately available to the Company. Following satisfaction of the
Offering Conditions and release of escrow funds to the Company, subscribers
whose funds were originally placed in escrow and subscribers whose funds were
immediately available to the Company face the risk of loss of a portion of
their subscription funds if the Company and the Bank do not receive final
regulatory approvals. See "TERMS OF THE OFFERING - Conditions of the Offering"
and "RISK FACTORS -- Possible Loss of a Portion of Subscription Funds."
Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an established market for such stock
will develop. The Company presently does not intend to seek to list the Common
Stock on a national securities exchange or to qualify such Common Stock for
quotation on the National Association of Securities Dealers Automated Quotation
System. INVESTMENT IN THE SECURITIES INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" Beginning on page 3 for information that should be considered by each
prospective investor.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==========================================================================================================
Price Underwriting
to Discounts and Proceeds to
Public Commissions(1) the Company(2)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share(3) . . . . . $10.00 $ 0 $10.00
Total Minimum(4) . . . $6,100,000 $ 0 $6,100,000
Total Maximum(4) . . . $8,000,000 $ 0 $8,000,000
==========================================================================================================
(Footnotes on reverse side)
</TABLE>
<PAGE> 3
(Table on reverse side)
(1) The securities offered hereby will be sold on a best-efforts, 610,000
share minimum basis by certain directors and executive officers of the
Company and no commissions will be paid on such sales. See "TERMS OF
THE OFFERING."
(2) Before deducting issuance and distribution expenses, estimated to be
$41,500, including registration fees, legal and accounting fees,
printing, and other miscellaneous expenses. See "USE OF PROCEEDS" for
an itemized statement of expenses.
(3) Prior to this offering, there has been no established market for the
shares of the Company's Common Stock. The offering price was
arbitrarily determined by the Board of Directors of the Company and does
not bear any relationship to the Company's assets, book value, net worth
or any other recognized criteria of value. In the event a market should
develop for the Common Stock after completion of this offering, there
can be no assurance that the market price will equal or exceed the
offering price herein.
(4) These securities are offered on a best-efforts, 610,000 share minimum
basis. If payment in cash for 610,000 shares is not received prior to
the Expiration Date (________________, 1997, unless extended to a date
not later than ______________, 1997, which is 270 days after the initial
offering period) the offering will terminate and all subscription funds,
together with any interest earned thereon, will be promptly returned to
subscribers. The organizers of the Company have indicated that they
will subscribe for additional shares in this offering, not to exceed an
aggregate of 180,350 shares or 29.57% of the minimum offering, if
necessary to help the Company sell out the offering which is necessary
to release subscription proceeds from the Subscription Escrow Account,
as defined herein. All purchases of shares of Common Stock by the
Company's organizers will be subject to affiliate resale limitations
under the Securities Act of 1933, as amended, and will be made on the
same terms as those made by other investors. The organizers of the
Company have represented to the Company that all purchases of Common
Stock will be made for investment purposes only and not with a view to
resell such shares. See "RISK FACTORS," "TERMS OF THE OFFERING," and
"ORGANIZERS AND PRINCIPAL STOCKHOLDERS."
The Company reserves the absolute right to cancel all subscriptions for
any reason whatsoever, at any time prior to the time that the Company withdraws
subscription funds from the Subscription Escrow Account and, at that time,
investors will be returned all subscription funds, adjusted for profits if any,
realized from the investment of such funds. See "TERMS OF THE OFFERING."
The Company is not a reporting company for purposes of the Securities
Exchange Act of 1934.
The date of this Prospectus is _______________, 1997.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TERMS OF THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS OF THE BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUPERVISION AND REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ORGANIZERS AND PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
Appendix A - Escrow Agreement
Appendix B - Subscription Materials
NO DEALER, SALESMAN, ORGANIZER OF THE COMPANY OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE
SHARES OF COMMON STOCK TO WHICH IT RELATES, OR ANY OFFER OF SUCH SHARES OF
COMMON STOCK TO ANY PERSON IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH
OFFER IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ANY OF THE
DATES AS OF WHICH INFORMATION IS FURNISHED HEREIN OR THE DATE HEREOF. HOWEVER,
DURING THE PERIOD IN WHICH OFFERS OR SALES ARE BEING MADE HEREUNDER, THE
COMPANY IS REQUIRED TO UPDATE THE PROSPECTUS TO REFLECT ANY FACTS OR EVENTS
ARISING AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WHICH REPRESENT A FUNDAMENTAL CHANGE IN THE
INFORMATION SET FORTH IN THE REGISTRATION STATEMENT.
UNTIL _________________, 1997 (90 DAYS FROM THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
The Company intends to furnish its shareholders annual reports
containing audited financial statements.
<PAGE> 5
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR SAVINGS
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
THE COMPANY
Rockdale National Bancshares, Inc. (the "Company") was organized under
the laws of the State of Georgia on February 13, 1997 for the purpose of
operating as a bank holding company pursuant to the federal Bank Holding
Company Act of 1956, as amended (the "Act"), and the Georgia Bank Holding
Company Act. The minimum net proceeds of this offering is $6,100,000. Of this
amount, $6,000,000 will be used to purchase 100% of the common stock to be
issued by Rockdale National Bank (the "Bank"). The remaining $100,000 will be
retained at the Company level to pay for the Company's issuance and
distribution expenses (consisting of organization and offering expenses,
estimated to be $41,500) and for other corporate purposes (consisting primarily
of working capital and funds for expanding banking and banking-related
services, estimated to be $58,500). See "USE OF PROCEEDS." Neither the Company
nor the Bank has commenced business operations, and neither will do so until
this offering is completed and the requisite approvals of the Comptroller of
the Currency ("OCC"), the Federal Deposit Insurance Corporation ("FDIC"), the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
and the Georgia Department of Banking and Finance (the "Georgia Banking
Department") are obtained. The Company's and the Bank's main office will be
located in Conyers, Rockdale County, Georgia. It is anticipated that the Bank
will commence business operations in September 1997, or as soon thereafter as
practicable, out of its main office and one branch office, both of which are
located in Rockdale County. With the exception that it will have no trust
powers, the Bank will operate as a full service commercial bank with primary
emphasis upon high quality service to meet the financial needs of the
individuals and businesses residing and located in and around Rockdale County,
Georgia.
The Company's temporary mailing address is P.O. Box 82030, Conyers,
Georgia 30208, and the temporary telephone number is (770) 760-7573.
<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Common Stock Offered . . . . . . . . . . 800,000 shares. A minimum of 610,000 shares are required to be sold in
this offering. See "TERMS OF THE OFFERING."
Common Stock to be Outstanding
after this Offering . . . . . . . . . . . Minimum - 610,000 shares
Maximum - 800,000 shares
Price . . . . . . . . . . . . . . . . . . $10.00 per share
Conditions of the Offering . . . . . . . The offering is expressly conditioned upon fulfillment of the following
conditions: (a) not less than $6,100,000 shall have been deposited
with the Escrow Agent, (b) the Company shall have received approval
from the Federal Reserve Board and the Georgia Banking Department of
its application to become a bank holding company, (c) the Organizers
shall have received preliminary approval from the OCC to charter the
Bank, (d) the proposed Bank shall have received approval of its
application for deposit insurance from the FDIC, and (e) the Company
shall not have canceled this offering prior to the time funds are
withdrawn from the Subscription Escrow Account. Until these conditions
have been met, all subscription funds will
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<TABLE>
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be placed in an escrow account with the Escrow Agent. If these
Offering Conditions are not satisfied, all subscription funds that have
been placed in the escrow account will be returned, together with any
interest earned thereon, promptly to the subscribers. Once all of the
offering conditions are met, the Escrow Agent will release all funds to
the Company. The subscription funds of any person who subscribes for
shares following satisfaction of the Offering Conditions will not be
placed in escrow, but will be immediately available to the Company.
Following satisfaction of the Offering Conditions and release of escrow
funds to the Company, subscribers whose funds were originally placed in
escrow and subscribers whose funds were immediately available to the
Company face the risk of loss of a portion of their subscription funds
if the Company and the Bank do not receive final regulatory approvals.
Prior to the release of the funds, the Escrow Agent is authorized to
invest subscription funds in certain short-term investments, upon
instruction by the President of the Company, in direct obligations of
the United States Government and certain short-term investments such as
insured certificates of deposits, and/or money market management trusts
for short-term obligations of the United States Goverment, with maturities
not to exceed 90 days. See "TERMS OF THE OFFERING."
Plan of Distribution . . . . . . . . . . Shares of the Common Stock of the Company will be marketed on a best-
efforts, 610,000 share minimum basis exclusively through certain
directors and executive officers of the Company, none of whom will
receive any commissions or other form of remuneration based on the sale
of the shares. If the Offering Conditions are not satisfied by
_________________, 1997, the Company may engage an underwriter to sell
the shares on a best-efforts basis and the underwriter would receive a
commission on such sales not to exceed 10%. See "TERMS OF THE OFFERING
-- Plan of Distribution."
Use of Proceeds . . . . . . . . . . . . . To purchase 100% of the issued and outstanding capital stock of the
Bank; to pay issuance and distribution expenses and for other
corporate purposes. See "USE OF PROCEEDS."
Risk Factors. . . . . . . . . . . . . . . The securities offered hereby may be deemed to be speculative and
involve certain risks. These risks include the fact that the Company
and the Bank are newly organized entities, regulatory approval of the
Bank depends upon approval of the proposed chief executive officer, new
banks are typically not profitable in the first year of operation,
competition in the Bank's market area is intense, unpredictable
economic conditions may affect profitability, government regulation,
lack of dividends, investment by the organizers, certain anti-takeover
provisions that make a change in control more difficult, there is no
established market for the Common Stock, the offering price was
arbitrarily determined, shareholders have no preemptive rights, and the
offering is being made without the services of an underwriter. See
"RISK FACTORS."
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2
<PAGE> 7
RISK FACTORS
PROSPECTIVE INVESTORS IN THE COMMON STOCK SHOULD GIVE CAREFUL ATTENTION
TO THE FOLLOWING STATEMENTS RESPECTING CERTAIN RISKS APPLICABLE TO THE
OFFERING, WHICH RISKS INCLUDE BUT ARE NOT LIMITED TO THOSE NOTED BELOW.
CERTAIN STATEMENTS INCLUDED IN THIS PROSPECTUS CONCERNING THE COMPANY'S
FUTURE FINANCIAL CONDITION AND PERFORMANCE ARE FORWARD-LOOKING STATEMENTS AND
THE FACTORS DISCUSSED BELOW, AS WELL AS DISCUSSED ELSEWHERE IN THIS PROSPECTUS,
COULD CAUSE ACTUAL RESULTS AND DEVELOPMENTS TO BE MATERIALLY DIFFERENT FROM
THOSE EXPRESSED IN OR IMPLIED BY SUCH STATEMENTS.
NO OPERATING HISTORY
Neither the Company nor the Bank has commenced business operations, and
both are newly organized entities with no operating history. Thus, investors
in the Common Stock are subject to the risk of loss of all or a part of their
investment. Furthermore, final regulatory approval to commence banking
operations will not be obtained until the Company has expended a portion of the
proceeds of this offering to employ personnel, obtain temporary office space
and pay other pre-opening expenses. The Company expects the OCC to grant
preliminary approval of the proposed Bank's charter application by June 30,
1997. The Company also expects the Bank to receive approval of its application
for deposit insurance from the FDIC by June 30, 1997. Upon receipt of
preliminary approval from the OCC, the Company will file an application to
become a bank holding company with the Federal Reserve Board and the Georgia
Banking Department. Once preliminary charter approval is obtained from the
OCC, the Bank must open for business (i.e., obtain a charter) within 18
Company must obtain final approval to commence banking operations within
months after receipt of OCC preliminary approval. There can be no
assurance that the foregoing approvals will be obtained or that the Bank's
opening will occur within the designated time requirement. See "TERMS OF THE
OFFERING -- Conditions of the Offering" and " -- Failure of Bank to Commence
Operations."
POSSIBLE LOSS OF A PORTION OF SUBSCRIPTION FUNDS
In the event that the Company satisfies the Offering Conditions, breaks
escrow and issues the shares of Common Stock, but final approval to commence
banking operations is not granted within 18 months after receipt of preliminary
approval from the OCC, the Company will solicit shareholder approval for its
dissolution and liquidation, in which event, the Company will return to
subscribers all subscription funds and interest earned thereon, less all
expenses incurred by the Company, including issuance and distribution expenses,
the organization and pre-opening expenses of the Bank, expenses associated
with a delayed offering or delayed regulatory approvals and claims of
creditors. Such expenses, in the aggregate, may exceed $350,000. See "USE OF
PROCEEDS." In the event of dissolution and liquidation following the issuance
of shares of Common Stock it is possible that persons who submitted
subscription funds that were placed in escrow and those who submitted funds
after escrow had been broken will receive only a portion of their initial
investment due to the foregoing expenses. See "TERMS OF THE OFFERING --
Failure of Bank to Commence Operations."
RELIANCE UPON KEY MANAGEMENT
Regulatory approval to establish and operate a national bank is, among
other factors, dependent upon the OCC's approval of such bank's proposed Chief
Executive Officer. Generally, the Chief Executive Officer of a start-up
financial institution is deemed to be vital to the potential success of the new
institution. The Bank's application for a charter filed with the OCC proposed
William L. Daniel as the Bank's Chief Executive Officer. In the event of
death, disability, resignation or other event causing the unavailability of Mr.
Daniel, final regulatory approval to commence banking operations would be
delayed until such time as a suitable replacement is approved by the OCC.
There can be no assurance that a suitable replacement could be found in the
event of the unavailability of Mr. Daniel.
FINANCIAL POSITION OF THE COMPANY
The initial activity of the Company will be merely to act as the sole
shareholder of the Bank. Thus, the profitability of the Company will be
dependent upon the successful operation of the Bank. Typically, new
3
<PAGE> 8
banks are not profitable in the first year of operation and sometimes are not
profitable for several years. The Bank will incur substantial expenses in
establishing itself as a going concern and there can be no assurance that the
Bank will be operated profitably or that future earnings, if any, will meet the
levels of earnings prevailing in the banking industry.
COMPETITION
With the exception that it will have no trust powers, the Bank will be a
full service commercial bank in Conyers, Rockdale County, Georgia. Competition
among financial institutions in the Bank's market area is intense, and the Bank
will compete with other state and national banks, savings and loan
associations, consumer finance companies, credit unions, money market mutual
funds, and other financial institutions which have far greater financial
resources than those available to the Bank. For example, as a start-up
financial institution, the Bank's relatively small capital base may affect its
ability to compete for loans due to regulatory lending limitations. The Bank's
size may also impact its ability to compete effectively with larger
institutions in offering other services. If the Bank is unable to compete for
deposits effectively in its primary service area, such inability would likely
have an adverse effect on the Bank's potential for growth and profitability.
In addition, the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994, which became effective in November 1994, will further increase
competition by eliminating interstate branching barriers for certain financial
institutions in the future. See "BUSINESS OF THE BANK -- Market Area and
Competition."
UNPREDICTABLE ECONOMIC CONDITIONS
Commercial banks and other financial institutions are affected by
economic and political conditions, both domestic and international, and by
governmental monetary policies. Conditions such as inflation, recession,
unemployment, high interest rates, short money supply, scarce natural
resources, international disorders, and other factors beyond the control of the
Company and the Bank may adversely affect their profitability. See "BUSINESS
OF THE BANK -- Monetary Policies."
GOVERNMENT REGULATION
The Company and the Bank operate in a highly regulated environment and
are subject to supervision by several governmental regulatory agencies,
including the Federal Reserve Board, the OCC, the Georgia Banking Department,
and the Securities and Exchange Commission. The Company and the Bank are
vulnerable to future legislation and government policy, including bank
deregulation and interstate expansion, which could adversely affect the banking
industry as a whole, including the operations of the Company and the Bank. See
"SUPERVISION AND REGULATION."
NO DIVIDENDS
It is not anticipated that the Company will distribute any dividends to
shareholders in the foreseeable future. Earnings of the Bank, if any, are
expected to be retained by the Bank to enhance its capital structure or
distributed to the Company to defray its operating costs. Dividend
distributions of national banks are restricted by statute and regulation. See
"DIVIDEND POLICY."
PURCHASES BY ORGANIZERS
The Organizers presently intend to purchase 155,000 shares or $1,550,000
in the offering, which will equal 25.41% of the 610,000 shares to be
outstanding upon completion of the minimum offering. See "ORGANIZERS AND
PRINCIPAL STOCKHOLDERS." However, the Organizers have indicated that they will
subscribe for an additional 25,350 shares in the offering if necessary to
help the Company complete
4
<PAGE> 9
the offering and release proceeds from escrow. Total purchases by the
Organizers will not exceed 180,350 shares or $1,803,500 in the aggregate, which
will equal 29.57% of the 610,000 shares to be outstanding upon completion of the
minimum offering. See "ORGANIZERS AND PRINCIPAL STOCKHOLDERS." The Organizers
have represented to the Company that all purchases of Common Stock will be made
for investment purposes only and not with a view to resell such shares.
ANTI-TAKEOVER PROVISIONS
The Company's Articles of Incorporation contain anti-takeover provisions
requiring supermajority shareholder approval to effect certain extraordinary
corporate transactions such as the removal of directors and the amendment of
certain provisions of the Articles of Incorporation. In addition, a merger,
sale of control, or similar transaction which is not approved by the Board of
Directors is also subject to supermajority shareholder approval. Further, the
Company's Articles of Incorporation provide for a classified Board of
Directors, whereby one-third of the members of the Board of Directors shall be
elected each year and each director of the Company will serve for a term of
three years. The effect of these anti-takeover provisions is to make it more
difficult to effect a change in control of the Company through the acquisition
of a large block of the Company's Common Stock, even though a majority of the
Company's shareholders may vote in favor of such a change in control. The
State of Georgia has statutory provisions relating to business combinations
with so-called "interested shareholders" but these provisions are inapplicable
to the Company because the Company has elected not to be governed by these
provisions in its Bylaws. See "DESCRIPTION OF COMMON STOCK."
NO ESTABLISHED MARKET
Presently there is no established market for the Common Stock. There
can be no assurance that an established public market will develop for such
securities upon completion of this offering or whether substantial trading
activity will occur for several years, if at all. Moreover, in the event that
the Organizers subscribe for additional shares in this offering in order to
achieve the minimum subscription level necessary to release subscription
proceeds from the Subscription Escrow Account, an established public market for
the Common Stock will be less likely to develop. As a result, investors who
may need or wish to dispose of all or a part of their investment in the Common
Stock may not be able to do so except by private, direct negotiations with
third parties. The Company does not presently intend to seek to list the
Common Stock on a national securities exchange or to qualify such Common Stock
for quotation on the National Association of Securities Dealers Automated
Quotation System.
ARBITRARY DETERMINATION OF OFFERING PRICE
Prior to this offering there has been no established market for the
shares of the Company's Common Stock. The offering price was arbitrarily
determined by the Board of Directors of the Company, and does not bear any
relationship to the Company's assets, book value, net worth, or any other
recognized criteria of value. In determining the offering price of the Common
Stock, the Comptroller's capital requirements for the Bank and general market
conditions for the sale of such securities were considered. In the event a
market should develop for the Common Stock after completion of this offering,
there can be no assurance that the market price will equal or exceed the
offering price herein.
ABSENCE OF PREEMPTIVE RIGHTS
No holder of the Common Stock of the Company has preemptive rights with
respect to the issuance of shares of that or any other class of stock and no
holder of the Common Stock is entitled to cumulative voting rights with respect
to the election of directors. The authorized Common Stock of the Company
consists of 10,000,000 shares of Common Stock, $1.00 par value per share. The
Board of Directors of the Company could from time to time determine to issue
additional shares of the authorized Common Stock of
5
<PAGE> 10
the Company in addition to the shares offered hereby and in such event the
ownership interests of the subscribers in this offering would be diluted.
POSSIBLE DILUTIVE EFFECT OF STOCK OPTION PLANS
The Company intends to establish an Incentive Stock Option Plan (the
"Plan") whereby stock options may be granted to employees who are contributing
significantly to the management or operation of the business of the Company or
its subsidiaries as determined by the committee administering the Plan. In
addition, the Board of Directors may, at the Company's first Annual Meeting of
Shareholders after the Bank opens for business, propose for shareholder
approval a directors stock option plan, which will be designed to provide
incentive compensation to directors in the event that the Company's common
stock increases in value during the term of such options. The grant of options
under the Plan and the contemplated directors stock option plan would dilute the
ownership interests in the Company of the subscribers in this offering. See
"MANAGEMENT - Stock Option Plans."
FUTURE CAPITAL NEEDS
The Company intends to capitalize the Bank at $6,000,000, regardless of
whether the minimum or maximum number of shares of Common Stock of the Company
are sold. Based on a capitalization of $6,000,000, management anticipates that
the Bank will be a "well capitalized" institution. See "SUPERVISION AND
REGULATIONS." Any funds in addition to the $6,000,000 capitalization will be
reserved for the growth of the Bank in compliance with OCC regulations.
Although management of the Company anticipates that the minimum amount of
capital to be raised by this offering (i.e., $6,100,000) will be sufficient to
support the Bank's immediate capital needs, the Board of Directors of the
Company may determine from time to time to obtain additional capital through
the issuance of additional shares of the authorized Common Stock of the
Company, or through long- or short-term debt financing; although management can
give no assurance that such financing if needed, will be available or if
available will be on terms acceptable to management. Morever, if the Company
determines to raise additional capital through the issuance of additional
shares of the authorized Common Stock of the Company, such issuance would
dilute the ownership interests in the Company of the subscribers in this
offering. See "USE OF PROCEEDS."
NO UNDERWRITER OF THIS OFFERING
This offering is being made without the services of an underwriter.
Sales will be solicited only by certain executive officers and directors of the
Company. Accordingly, there can be no assurance that all of the shares offered
hereby will be sold at the expiration of the offering period. See "TERMS OF
THE OFFERING."
6
<PAGE> 11
THE COMPANY
Rockdale National Bancshares, Inc. (the "Company") was incorporated
under the laws of the State of Georgia on February 13, 1997 to operate as a
bank holding company pursuant to the federal Bank Holding Company Act of 1956,
as amended (the "Act"), and to purchase 100% of the issued and outstanding
capital stock of Rockdale National Bank, an association to be organized under
the laws of the United States (the "Bank"), which will conduct a general
banking business in Conyers, Georgia. The Organizers expect to receive
preliminary approval from the OCC to charter the Bank by June 30, 1997. The
Company also expects the Bank to receive approval of its application for
deposit insurance from the Federal Deposit Insurance Corporation by June 30,
1997. Upon receipt of preliminary approval from the OCC, the Company will file
an application to become a bank holding company with the Federal Reserve Board
and the Georgia Banking Department. Upon obtaining regulatory approval, the
Company will be a registered bank holding company subject to regulation by the
Federal Reserve Board and the Georgia Banking Department.
It is anticipated that the Bank will commence operations in September
1997, or as soon thereafter as practicable. See "BUSINESS OF THE BANK." The
Organizers of the Company and the Bank are nine individuals, eight of whom
reside in Conyers, Rockdale County, Georgia. See "ORGANIZERS AND PRINCIPAL
STOCKHOLDERS." All of the Organizers will serve on the initial Board of
Directors of the Company and the Bank. See "MANAGEMENT."
The principal offices of the Company and the Bank will be located in a
newly constructed one-story commercial building situated on approximately 2.5
acres of land. See "BUSINESS OF THE COMPANY -- Premises." The principal
offices will be located at the intersection of Highway 138 and Miller's Chapel
Road, 1000 Georgia Highway 138, in Conyers, Georgia. Once the Bank opens for
business and until construction of the principal offices is complete, the
Company will occupy temporary offices also located at the same location as the
permanent facility. See "BUSINESS OF THE COMPANY -- Premises." It is
anticipated that the Company will occupy the temporary offices for
approximately one year. The mailing address of the Company's present temporary
office, which it will occupy until the Bank opens for business, is P.O. Box
82030, Conyers, Georgia 30208, and its telephone number at such address is
(770) 760-7573.
TERMS OF THE OFFERING
GENERAL
The Company is offering hereunder 800,000 shares of its Common Stock for
cash at a price of $10.00 per share. A minimum subscription of 100 shares is
required for each subscription hereunder. Investors may subscribe to a maximum
of 30,000 shares pursuant to this offering, unless additional subscriptions are
approved by the Board of Directors of the Company. The purchase price of
$10.00 per share shall be paid in full upon execution and delivery of the
Subscription Agreement. All subscriptions tendered by investors are subject to
acceptance by the Board of Directors of the Company, and the Company reserves
the absolute and unqualified right to reject or reduce any subscription for any
reason prior to acceptance. Furthermore, the Company reserves the right to
cancel this offering at any time prior to the time the Company withdraws funds
from the Subscription Escrow Account, for any reason whatsoever.
Prior to this offering there has been no established public market for
the shares of the Common Stock and there can be no assurance that an
established market for such stock will develop. The offering price has been
arbitrarily determined and is not a reflection of the Company's book value, net
worth, or any other such recognized criteria of value. In determining the
offering price of the Common Stock, the capital requirements of the OCC for the
Bank and general market conditions for the sale of such securities were
considered. There
7
<PAGE> 12
can be no assurance that, if a market should develop for the Common Stock, the
post-offering market price will equal or exceed the offering price.
CONDITIONS OF THE OFFERING
This offering will expire at 5:00 p.m. Eastern Daylight Time, on
___________________, 1997 (90 days after the date of this Prospectus) (the
"Expiration Date"), unless such date is extended by the Company. The
Expiration Date may be extended by the Company without notice to subscribers
for up to three consecutive 90-day periods, or not later than
____________________, 1997. The offering is expressly conditioned upon
fulfillment of the following conditions (the "Offering Conditions") on or prior
to the Expiration Date, as extended. The Offering Conditions, which may not be
waived, are as follows:
(a) Not less than $6,100,000 shall have been deposited with the
Escrow Agent in the Subscription Escrow Account;
(b) The Company shall have received approval from the Federal
Reserve Board and the Georgia Banking Department of its application to become a
bank holding company, the Organizers shall have received preliminary approval
from the OCC to charter the Bank, and the proposed Bank shall have received
approval of its application for deposit insurance from the FDIC; and
(c) The Company shall not have canceled this offering prior to the
time funds are withdrawn from the Subscription Escrow Account.
ESCROW OF SUBSCRIPTION FUNDS
Until the Offering Conditions above have been met, all subscription
funds and documents tendered by investors will be placed in an escrow account
(the "Subscription Escrow Account") with The Bankers Bank (the "Escrow Agent").
Pursuant to the terms of the Escrow Agreement, the form of which is attached to
this Prospectus as Appendix "A," if all of the Offering Conditions are met, the
Escrow Agent will release all subscription funds, and any profits thereon, to
the Company.
Pending disposition of the Subscription Escrow Account under the Escrow
Agreement, the Escrow Agent is authorized, upon instructions to be given by
William L. Daniel, to invest subscription funds in direct obligations of the
United States Government, in short-term insured bank certificates of deposit,
and/or in bank money market funds, with maturities not to exceed 90 days. The
Company will invest the subscription funds and any additional funds obtained
after breaking escrow and prior to the time that the Company infuses capital
into the Bank in a similar manner. The offering proceeds will be used to
purchase capital stock of the Bank and to repay issuance and distribution
expenses, consisting of organization and offering expenditures. See and "USE OF
PROCEEDS'."Organization costs, estimated to be $24,000, will be deferred and
amortized as expenses over the Company's initial sixty months of operations.
Offering expenses, estimated to be $17,500, will be charged against the initial
period's operating results. See Note 1 to "NOTES TO FINANCIAL STATEMENTS."
In the event the Offering Conditions are not met by the Expiration Date,
as extended, the Escrow Agent shall promptly return to the subscribers their
subscription funds, together with their allocated share of profits, if any,
earned on the investment of the Subscription Escrow Account. Each subscriber's
proportionate share of Subscription Escrow Account earnings shall be that
fraction (i) the numerator of which is the dollar amount of such subscriber's
tendered subscription multiplied by the number of days between the date of
acceptance of the investor's subscription and the date of the offering
termination, inclusive (the subscriber's "Time Subscription Factor"), and (ii)
the denominator of which is the aggregate Time Subscription Factors of all
investors depositing subscription funds in the Subscription Escrow Account.
The expenses incurred by the Company prior to the satisfaction of the Offering
Conditions will be borne by the Organizers and not by the subscribers.
8
<PAGE> 13
NO ASSURANCE CAN BE GIVEN THAT SUBSCRIPTION FUNDS CAN OR WILL BE
INVESTED AT THE HIGHEST RATE OF RETURN AVAILABLE OR THAT ANY PROFITS WILL BE
REALIZED FROM THE INVESTMENT OF SUBSCRIPTION FUNDS.
If all Offering Conditions are satisfied, and the Company withdraws the
subscription funds from the Subscription Escrow Account to purchase the capital
stock of the Bank and to repay issuance and distribution expenses incurred, all
profits and earnings on such account shall belong to the Company. See USE OF
PROCEEDS."
The Bankers Bank, by accepting appointment as Escrow Agent under the
Escrow Agreement, in no way endorses the purchase of the Company's securities
by any person.
FAILURE OF BANK TO COMMENCE OPERATIONS
The Comptroller requires that a new national bank open for business (i.e.,
obtain a charter) within 18 months after receipt of preliminary approval from
the Comptroller. The Organizers anticipate that the Bank will open for
business in September 1997. Because final approval of the Bank's charter is
conditioned on the Company's raising funds to capitalize the Bank at
$6,000,000, the Company expects to issue the shares of Common Stock before it
has obtained all final regulatory approvals for the Bank. In the event that
the Company issues the shares of Common Stock and the Comptroller does not
grant the Bank final regulatory approval to commence banking operations by 18
months after the Bank's receipt of preliminary approval from the Comptroller,
the Company will solicit shareholder approval for its dissolution and
liquidation, in which event, the Company will promptly return to subscribers
all subscription funds and interest earned thereon, less all expenses incurred
by the Company, including the issuance and distribution expenses of the
offering and the organization and pre-opening expenses of the Bank. Therefore,
if the Company and the Bank do not receive final regulatory approvals,
subscribers whose funds were originally placed in escrow and subscribers whose
funds were immediately available to the Company face the risk of loss of a
portion of their subscription funds. It is possible that this return may be
further reduced by amounts paid to satisfy claims of creditors, as discussed in
the following paragraph.
Once the Company issues the shares of Common Stock offered hereby, the
offering proceeds may be considered part of general corporate funds and thus
may be subject to the claims of creditors of the Company, including claims
against the Company that may arise out of actions of the Company's officers,
directors, or employees. It is possible, therefore, that one or more creditors
may seek to attach the proceeds of the offering prior to the Bank's
commencement of banking operations. If such an attachment occurred and it
became necessary to pay the subscription funds to shareholders because of
failure to obtain all necessary regulatory approvals, the payment process might
be delayed; and if it became necessary to pay creditors from the subscription
funds, the payment to shareholders might be further reduced.
PURCHASES BY ORGANIZERS OF THE COMPANY
The Organizers have indicated that they may be willing to subscribe for
additional shares in this offering, if necessary, to help the Company complete
the offering in order to release subscription proceeds from the Subscription
Escrow Account. The maximum aggregate number of shares which may be subscribed
by the Organizers in this offering is 180,350 shares. Any such purchases of
additional shares by the Organizers will be subject to affiliate resale
limitations of the Securities Act of 1933, as amended, and will be made on the
same terms as those made by other investors. The Organizers have represented
to the Company that any such purchases will be made for investment purposes
only and not with a view to resell such shares. If additional purchases, as
described above, are not necessary, the Organizers will purchase a minimum of
155,000 shares of the Company's Common Stock pursuant to this offering, or
25.41% of the 610,000 shares to be outstanding upon completion of the minimum
offering. If additional purchases as described above are necessary, the
Organizers will purchase additional shares and will own, following the
9
<PAGE> 14
offering, more than 29.5% of the outstanding Common Stock of the Company. See
"ORGANIZERS AND PRINCIPAL STOCKHOLDERS."
PLAN OF DISTRIBUTION
The Company may cancel this offering for any reason at any time prior to
the release of subscription funds from the Subscription Escrow Account, and
accepted subscriptions are subject to cancellation in the event that the
Company elects to cancel the offering in its entirety.
Shares of the Common Stock of the Company will be marketed on a
best-efforts, 610,000 share minimum basis exclusively through certain directors
and executive officers of the Company, none of whom will receive any
commissions or other form of remuneration based on the sale of the shares.
However, in the event that the Offering Conditions have not been satisfied by
___________________, 1997, the Company may engage an underwriter to sell the
shares on a best- efforts basis and such underwriter would receive a commission
based upon such sales. It is anticipated that commissions paid to such
underwriter, if retained, will not exceed 10% of the $10.00 per share sales
price and that other expenses of such underwriting will not exceed an aggregate
of $50,000. In the event that the Offering Conditions have not been satisfied
by the Expiration Date, this offering will be terminated and subscription funds
promptly returned to the subscribers, together with their allocated share of
profits, if any, earned on the investment of the Subscription Escrow Account as
described above. See "TERMS OF THE OFFERING -- Escrow of Subscription Funds."
As soon as practicable, but no more than ten (10) business days after
receipt of a subscription, the Company will accept or reject such subscription.
Subscriptions not rejected by the Company within this ten (10) day period shall
be deemed accepted. Once a subscription is accepted by the Company, it cannot
be withdrawn by the subscriber. Payment from any subscriber for shares in
excess of the number of shares allocated to such subscriber will be refunded by
mail, without interest, within ten (10) days of the date of rejection.
Certificates representing shares of Common Stock of the Company, duly
authorized and fully paid, will be issued as soon as practicable after
subscription funds are released to the Company from the Subscription Escrow
Account.
Subscriptions to purchase shares of Common Stock can be made by
completing the Subscription Agreement attached to this Prospectus and
delivering the same to the Company at its temporary offices, 1600 Georgia
Highway 20, Conyers, Georgia 30208 or mailing the same in the enclosed
self-addressed, stamped envelope. Full payment of the purchase price must
accompany the subscription. Failure to pay the full subscription price shall
entitle the Company to disregard the subscription. No Subscription Agreement
is binding until accepted by the Company, which may, in its sole discretion,
refuse to accept any subscription for shares, in whole or in part, for any
reason whatsoever. After a subscription is accepted and proper payment
received, the Company shall not cancel such subscription unless all accepted
subscriptions are canceled. Unless otherwise agreed by the Company, all
subscription amounts must be paid in United States currency by check, bank
draft, or money order payable to "The Bankers Bank, Escrow Agent for Rockdale
National Bancshares, Inc." A subscription will be accepted in writing by the
Company in the Form of Acceptance attached to this Prospectus.
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<PAGE> 15
USE OF PROCEEDS
The gross proceeds from the sale of shares of Common Stock offered by
the Company are estimated to be $6,100,000, assuming the sale of 610,000 shares
for cash. However, if 610,000 shares are not sold for cash, prior to the
Expiration Date as defined herein, then the offering will terminate and all
funds received from subscribers will be promptly refunded. See "TERMS OF THE
OFFERING."
The estimated expenses of issuance and distribution are as follows:
<TABLE>
<S> <C>
Registration fees, including blue
sky fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Printing and engraving expenses . . . . . . . . . . . . . . . . . . . . . . 3,000
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500
Mailing and distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Entertainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
-------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $41,500
=======
</TABLE>
The net proceeds of this offering ($6,068,500) as well as any interest
earned on the subscription funds will be used by the Company, after breaking
escrow, primarily for the purchase of 100% of the issued and outstanding
capital stock of the Bank and to repay expenses incurred in the organization of
the Company and the Bank.
As indicated in the charter application of the Bank filed by the
Company with the OCC, the Company intends to capitalize the Bank at $6,000,000.
Any funds in addition to the $6,000,000 capitalization will be reserved at the
Company level for growth of the Bank in compliance with OCC regulations. As a
result, of the net proceeds of this offering, $6,000,000 will be used to
capitalize the Bank, regardless of whether the minimum or maximum number of
shares of Common Stock of the Company are sold. Based on a capitalization of
$6,000,000, management anticipates the Bank will be a "well capitalized"
institution. See "SUPERVISION AND REGULATION." However, since national banks
are regulated with respect to the ratio that their total assets may bear to
their total capital, if the Bank experiences greater growth than anticipated,
it may require the infusion of additional capital to support that growth. In
such an event, management of the Company anticipates that any additional
capital needs could be met by either the issuance of additional shares of the
authorized Common Stock of the Company, or through long- or short-term debt
financing; although management can give no assurance that such financing
options, if needed, will be available or if available will be on terms
acceptable to management.
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<PAGE> 16
Net proceeds from this offering will be applied as follows:
<TABLE>
<CAPTION>
Net Proceeds Net Proceeds
Assuming Sale Assuming Sale
of 610,000 of 800,000
Shares Shares
------------------- -------------------
<S> <C> <C>
Purchase of capital stock of the Bank . . . . . . . . $6,000,000 $6,000,000
Issuance and distribution expenses of
Company . . . . . . . . . . . . . . . . . . . . . . . 41,500 41,500
Working capital and funds available
for expansion of banking and
banking-related services(1) . . . . . . . . . . 58,500 968,500
---------- ----------
$6,100,000 $7,010,000
========== ==========
</TABLE>
- -------------
(1) Amounts indicated do not include interest earned on investment of net
proceeds from this offering during the Company's organizational stage.
The following is a schedule of estimated expenditures to be made by the
Bank out of the proceeds from the sale of its capital stock to the Company,
including the Bank's operating expenses for its first twelve months of
operation.
<TABLE>
<S> <C>
Organizational and pre-opening expenses
of Bank including salaries,
legal and accounting fees . . . . . . . . . . . . . . . . . . . . $ 292,598
Purchase of land and construction of
bank facilities (temporary headquarters and branch office) . . . . 944,160
Bank premises - net occupancy expense . . . . . . . . . . . . . . . . 94,600
Salaries and benefits for officers . . . . . . . . . . . . . . . . . 384,400
Salaries and benefits for other employees . . . . . . . . . . . . . . 408,580
General and administrative expense,
comprised primarily of directors' fees,
data processing, marketing and advertising,
telephone, and casualty and deposit insurance . . . . . . . . . . 266,199
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . 344,048
Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,265,415
----------
$6,000,000
==========
</TABLE>
The expenditures for the purchase of land and construction of bank
facilities include the $424,160 purchase price under the contract dated
February 4, 1997 to acquire a 2.5 acre tract of land, located at the
intersection of Highway 138 and Miller's Chapel Road, which will be used as the
site of the Company's headquarters. In addition, the expenditures include the
$385,000 purchase price under the contract executed in February 1997 to acquire
a building and the 1.2 acre tract of land upon which the building is situated,
located at 1600 Georgia Highway 20, which will be used as a branch office for
the Bank. It is anticipated that construction of the headquarters building
will cost approximately $937,500 and that the cost of the improvements to the
building which will serve as the Bank's branch office will be approximately
$115,000.
12
<PAGE> 17
The above described expenses are estimates only and assume the Bank will
commence operations in September 1997, or as soon thereafter as practicable.
Actual expenses may exceed these amounts. Total organizational expenses and
deferred registration costs as of March 7, 1997 amounted to approximately
$79,000. The Company has a $300,000 line of credit at an interest rate of
prime with The Bankers Bank. Each of the nine Organizers has guaranteed twice
his or her pro rata share of the total line of credit.
DIVIDEND POLICY
As the Company and the Bank are both start-up operations, it will be the
policy of the Board of Directors of the Company to reinvest earnings for such
period of time as is necessary to ensure the success of the operations of the
Company and of the Bank. There are no current plans to initiate payment of
cash dividends, and future dividend policy will depend on the Bank's earnings,
capital requirements, financial condition and other factors considered relevant
by the Board of Directors of the Company.
The Bank will be restricted in its ability to pay dividends under the
national banking laws and by regulations of the OCC. Pursuant to 12 U.S.C.
Section 56, a national bank may not pay dividends from its capital. All
dividends must be paid out of net profits then on hand, after deducting losses
and bad debts. Payments of dividends out of net profits is further limited by
12 U.S.C. Section 60(a), which prohibits a bank from declaring a dividend on
its shares of common stock until its surplus equals its stated capital, unless
there has been transferred to surplus not less than 1/10 of the bank's net
profits of the preceding two consecutive half year periods (in the case of an
annual dividend). Pursuant to 12 U.S.C. Section 60(b), the approval of the
OCC is required if the total of all dividends declared by the Bank in any
calendar year exceeds the total of its net profits for that year combined with
its retained net profits for the preceding two years, less any required
transfers to surplus.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is still in the development stage, and will remain in that
stage until the offering of the Company's Common Stock is complete. The
Company has funded its start-up and organization costs through a $300,000 line
of credit with The Bankers Bank, which line of credit has been guaranteed by
the Organizers. Subscription funds during the offering contemplated herein
will be placed in an escrow account and invested in direct obligations of the
United States Government, in short-term insured certificates of deposits,
and/or money market management trusts for short-term obligations of the United
States Government, with maturities not to exceed 90 days.
In the opinion of the Company, the net proceeds of $6,068,500 from the
offering will be adequate capital to support the growth of the Company for its
first five years of operation and the Bank for its first five years of
operation. It is not anticipated that the Company will find it necessary to
raise additional funds to meet expenditures required to operate the business of
the Company and the Bank over the next twelve months. All anticipated material
expenditures for such period have been identified and provided for out of the
proceeds of this offering. See "USE OF PROCEEDS."
The plan of operations for the Company and the Bank is described in
detail elsewhere in this Prospectus. See "BUSINESS OF THE COMPANY" and
"BUSINESS OF THE BANK."
13
<PAGE> 18
BUSINESS OF THE COMPANY
GENERAL
The Company was incorporated under the laws of the State of Georgia on
February 13, 1997 for the purpose of organizing the Bank and purchasing 100% of
the outstanding capital stock of the Bank. The Organizers expect to receive
preliminary approval from the OCC to charter the Bank by June 30, 1997. The
Company also expects the Bank to receive approval of its application for
deposit insurance from the FDIC by June 30, 1997. Upon receipt of preliminary
approval from the OCC, the Company will file an application with the Federal
Reserve Board and the Georgia Banking Department to become a bank holding
company. The Company has been organized as a mechanism to enhance the Bank's
ability to serve its future customers' requirements for financial services.
The holding company structure will provide flexibility for expansion of the
Company's banking business through acquisition of other financial institutions
and provision of additional banking-related services which the traditional
commercial bank may not provide under present laws. For example, banking
regulations require that the Bank maintain a minimum ratio of capital to
assets. In the event that the Bank's growth is such that this minimum ratio is
not maintained, the Company may borrow funds, subject to the capital adequacy
guidelines of the Federal Reserve Board, and contribute them to the capital of
the Bank and otherwise raise capital in a manner which is unavailable to the
Bank under existing banking regulations.
The Company has no present plans to acquire any operating subsidiaries
other than the Bank; however, it is expected that the Company may make
additional acquisitions in the event that the Bank becomes profitable and such
acquisitions are deemed to be in the best interests of the Company and its
shareholders. Such acquisitions, if any, will be subject to certain regulatory
approvals and requirements. See "SUPERVISION AND REGULATION."
PREMISES
The Company has entered into a contract dated February 4, 1997 to
acquire a 2.5 acre tract of land located at the intersection of Highway 138 and
Miller's Chapel Road for a total purchase price of $424,160 from a party
unaffiliated with the Organizers or the Company. The Company intends to
construct its headquarters building on this property. The building will
contain approximately 7,500 square feet of finished space at a cost of
approximately $937,500. The building will contain a vault, 6 offices, 8 teller
stations, 3 drive-in windows, a boardroom conference facility, a loan
operations area, and an area for the Bank's bookkeeping operations.
Until construction of the Bank building is complete, the Company will
temporarily operate out of offices in a modular bank facility also located at
the intersection of Highway 138 and Miller's Chapel Road. The Company will
lease the approximately 2,000 square foot facility pursuant to a month-to-month
lease at the monthly rental of $3,300 after spending approximately $20,000 for
site preparation and facility set-up work. It is estimated that the Company
and the Bank will operate out of this temporary facility for approximately
twelve months until construction of the headquarters building has been
completed.
In addition to its headquarters facility, the Company's banking
subsidiary plans to open a small branch office facility located at 1600 Georgia
Highway 20, Conyers, Georgia. This branch facility, which is located on
approximately 1.2 acres of land, will be acquired for a purchase price of
approximately $385,000. It is anticipated that the facility will require
approximately $115,000 in improvements prior to its opening. This facility
will contain a safe, 1 office, 3 teller stations, and 2 drive-in windows. The
Company does not anticipate any material expenditures in connection with its
compliance with environmental laws.
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BUSINESS OF THE BANK
GENERAL
The Bank anticipates that it will commence business operations in
September 1997 in a temporary facility located at the intersection of Highway
138 and Miller's Chapel Road in Conyers, Georgia. The Bank plans to be a full
service commercial bank, without trust powers. The Bank will offer a full
range of interest bearing and non-interest bearing accounts, including
commercial and retail checking accounts, money market accounts, individual
retirement and Keogh accounts, regular interest bearing statement savings
accounts, certificates of deposit, commercial loans, real estate loans, home
equity loans, and consumer/installment loans. In addition, the Bank will
provide such consumer services as U.S. Savings Bonds, travelers checks,
cashiers checks, safe deposit boxes, bank by mail services, direct deposit, and
automatic teller services.
The philosophy of management of the Bank with respect to its initial
operations will emphasize prompt and responsive personal service to members of
the business and professional community of Rockdale County, Georgia in order to
attract customers and acquire market share now controlled by other financial
institutions in the Bank's market area. The Bank's two prime locations and
range of banking services, as well as its emphasis on personal attention and
service, prompt decision making and consistency in banking personnel, will be
major tools in the Bank's efforts to capture such market share. In addition,
the Bank's President has substantial banking experience, which will be an asset
in providing both products and services designed to meet the needs of the
Bank's customer base. The Organizers are active members of the business
community in Rockdale County, Georgia and continued active community
involvement will provide an opportunity to promote the Bank and its products
and services. The Organizers intend to utilize effective advertising and
superior selling efforts in order to build a distinct institutional image for
the Bank and to capture a customer base.
MARKET AREA AND COMPETITION
The primary market area for the proposed Bank in Rockdale County,
Georgia is included in the Atlanta Metropolitan Statistical Area and is located
approximately 30 minutes East of Atlanta via Interstate 20. Rockdale County
offers a wholesome environment to raise a family, yet has the advantages of a
large city because Atlanta is such a short distance away. While Rockdale
County is one of the smallest counties in Georgia, it has experienced steady
growth over the last several years and projections indicate that this growth
will continue into the next decade. Rockdale County includes industrial,
business and service offices, government offices, free-standing retail
businesses, restaurants, and numerous strip shopping centers. Principal
residential areas are located in the southern portion of the county while the
majority of the business activities are in the middle and northern portion of
the county. Conyers, the principal city located in Rockdale County, serves as
a regional medical community with a 107-bed non-profit hospital located in it.
This full service medical center supports over 200 physicians and has undergone
four major building expansions since 1979.
According to the 1990 U.S. Census, Rockdale County has a population of
54,091, representing an increase of 42.7% over the 1980 U.S. Census figure of
36,746. The Georgia Office of Planning and Budget indicated in a Georgia
Department of Labor Report that Rockdale County is estimated to have a
population of 74,432 by the year 2000.
Stability in the local Rockdale County economy principally evolves from
a large manufacturing base. Rockdale County has approximately 90 manufacturing
firms which produce a wide array of products, including apparel, lighting
fixtures, food processing, plastic cups, high tech robotics, and video
cassettes. The largest employers in Rockdale County include AT&T
Communications, Lithonia Lighting, Sweetheart Cups, Inc., Golden States Foods,
Maxell Corporation of America, Kysor-Warren, and Phoenix Refrigeration Systems,
Inc. The existence of these high quality, high paying employers has resulted
in a lower-than-average unemployment for Rockdale County. The Georgia
Department of Labor currently reports an
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unemployment rate for Rockdale County of 3.7%, the lowest of any county in the
immediate area. This rate compares to unemployment rates for the entire State
of Georgia of 5.2% and the United States of 6.1%.
Competition among financial institutions in the Bank's primary service
area is intense. There are 8 commercial banks with a total of 17 branches in
Rockdale County, and 2 credit unions with one branch office for each. The
largest banks are affiliated with 4 major bank holding companies. There are no
locally owned banks.
Financial institutions primarily compete with one another for deposits.
In turn, a bank's deposit base directly affects such bank's loan activities and
general growth. Primary methods of competition include interest rates on
deposits and loans, service charges on deposit accounts and the designing of
unique financial services products. The Bank will be competing with financial
institutions which have much greater financial resources than the Bank, and
which may be able to offer more and unique services and possibly better terms
to their customers. However, the Organizers of the Bank believe that the Bank
will be able to attract sufficient deposits to enable the Bank to compete
effectively with other area financial institutions.
The Bank will be in competition with existing area financial
institutions other than commercial banks and savings and loan associations,
including insurance companies, consumer finance companies, brokerage houses,
credit unions and other business entities which have recently been invading the
traditional banking markets. Due to the growth of the Rockdale County area, it
is anticipated that additional competition will continue from new entrants to
the market.
DEPOSITS
The Bank will offer a full range of interest bearing and non-interest
bearing accounts, including commercial and retail checking accounts, money
market accounts, individual retirement and Keogh accounts, regular interest
bearing statement savings accounts and certificates of deposit with fixed and
variable rates and a range of maturity date options. The sources of deposits
will be residents, businesses and employees of businesses within the Bank's
market area, obtained through the personal solicitation of the Bank's officers
and directors, direct mail solicitation and advertisements published in the
local media. The Bank will pay competitive interest rates on time and savings
deposits up to the maximum permitted by law or regulation. In addition, the
Bank will implement a service charge fee schedule competitive with other
financial institutions in the Bank's market area, covering such matters as
maintenance fees on checking accounts, per item processing fees on checking
accounts, returned check charges and the like.
LOAN PORTFOLIO
The Bank will engage in a full complement of lending activities.
Although management believes that real estate loans will be the Bank's
primary product (approximately 45% of the Bank's loan portfolio), commercial
and consumer/installment loans are expected to comprise significant portions of
the Bank's loan portfolio as well (35% and 25% respectively). While adjustable
rates for the Bank's real estate loans will be emphasized, fixed rates
will also be employed. Initially, the Bank will have a legal lending limit for
unsecured loans of up to $900,000 to any one person. See "SUPERVISION AND
REGULATION." Management of the Bank intends to orginate loans and to participate
with other banks with respect to loans which exceed the Bank's lending limits.
Management of the Bank does not believe that loan participations will
necessarily pose any greater risk of loss than loans which the Bank originates.
Lending will be directed principally towards individuals and businesses
whose demands for funds fall within the Bank's legal lending limits and which
are potential deposit customers of the Bank. The Bank does not anticipate any
foreign loans in the Bank's loan portfolio. The following is a description of
each of the major categories of loans anticipated in the Bank's loan portfolio:
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Commercial, Financial and Agricultural. These loans will be generally
---------------------------------------
granted to local business customers on a fully collateralized basis to meet
local credit needs. The loans will be able to be extended for periods of
between one year and five years and are anticipated to be structured to fully
amortize over the term of the loan or balloon after the third year or fifth
year of the loan with an amortization up to 15 years. The terms and loan
structure will be dependent on the collateral and strength of the borrower.
Risks of these types of loans depend on the general business conditions of the
local economy and the local business borrower's ability to sell its products
and services in order to generate sufficient business profits to repay the Bank
under the agreed upon terms and conditions. The value of the collateral held by
the Bank as a measure of safety against loss is most volatile in this loan
category. The Bank does not anticipate a significant amount of agricultural
loans in the Bank's loan portfolio.
Real Estate - Construction. These loans will be made for the construction
---------------------------
of single family residences in the Bank's market area. The loans will be
granted to qualified individuals with down payments of at least 20% of the
appraised value or contract price, whichever is less. The interest rates are
expected to fluctuate at 1% to 2% above the Bank's prime interest rate during
the six month construction period. The Bank will also charge a fee of 1% to 2%
in addition to the normal closing costs. These loans generally command higher
rates and fees commensurate with the risk warranted in the construction lending
field. The risk in construction lending is dependent upon the performance of
the builder in building the project to the plans and specifications of the
borrower and the Bank's ability to administer and control all phases of the
construction disbursements. Upon completion of the construction period,
management anticipates that the mortgage will be converted to a permanent loan
and normally sold to an investor in the secondary mortgage market.
Real Estate - Mortgage. These loans will be granted to qualified
-----------------------
individuals for the purchase of existing single family residences in the Bank's
market area. Both fixed and variable rate loans will be offered with
competitive terms and fees consistent with national mortgage investor
guidelines. For mortgage loans held for sale, the Bank will generally sell the
mortgages within a period of 30 days to 365 days to a pre-determined mortgage
investor and retain the origination fees. The risk of this type of activity
depends on the salability of the loan to national investors and interest rate
changes. Delivering these loans to the end investor on a mandatory basis and
meeting the investor's quality control procedures limits the Bank's risk of
making adjustable rate mortgage loans. The risk assumed by the Bank will be
conditioned upon the Bank's internal controls, loan underwriting and market
conditions in the national mortgage market. The Bank will retain loans for its
portfolio when it has sufficient liquidity to fund the needs of its established
customers and when rates are favorable to retain the loans. The loan
underwriting standards and policies will generally be the same for both loans
sold in the secondary market and those retained in the Bank's portfolio.
The Bank's adjustable rate mortgages will include lifetime interest rate
caps. All such loans will be qualified and underwritten to meet applicable
regulatory guidelines and no negative amortized loans will be offered. No loans
are expected to carry a prepayment penalty clause and therefore will be able to
be paid out or refinanced at a fixed rate, thus reducing the default risk.
These loans will be priced according to proper index and margin, and should not
lag behind funding costs.
Consumer/Installment Loans. These loans will be granted to individuals for
---------------------------
the purchase of personal goods such as automobiles, recreational vehicles,
mobile homes and for the improvement of single family real estate in the form
of second mortgages. The Bank will obtain a lien against the item
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purchased by the consumer and hold title until the loan is repaid in full.
These loans will generally be granted for periods ranging between one and five
years at fixed rates of interest. Loss or decline of income by the borrower due
to layoffs, divorce or unexpected medical expenses, represent unplanned
occurrences that may represent risk of default to the Bank. In the event of
default, a shortfall in the value of the collateral may pose a loss to the Bank
in this loan category.
INVESTMENTS
The Bank intends to invest primarily in direct obligations of the United
States, obligations guaranteed as to principal and interest by the United
States, obligations of agencies of the United States, and certificates of
deposit issued by commercial banks. In addition, the Bank will enter into
Federal Funds transactions with its principal correspondent banks, and
anticipates that it will primarily act as a net seller of such funds. The sale
of Federal Funds amounts to a short-term loan from the Bank to another bank.
The composition of the Bank's investment securities portfolio will
reflect a strategy of providing acceptable levels of interest income from
portfolio yields while maintaining an appropriate level of liquidity to assist
with controlling the Bank's interest rate position. As a result, the maturity
structure of the portfolio will generally be weighted toward securities held on
a short-term basis.
ASSET/LIABILITY MANAGEMENT
It is the objective of the Bank to manage assets and liabilities to
provide a satisfactory, consistent level of profitability within the framework
of established cash, loan investment, borrowing and capital policies. Certain
of the officers of the Bank will be responsible for monitoring policies and
procedures that are designed to ensure acceptable composition of the
asset/liability mix, stability and leverage of all sources of funds while
adhering to prudent banking practices. It is the overall philosophy of
management to support asset growth primarily through growth of core deposits,
which include deposits of all categories made by individuals, partnerships and
corporations. Management of the Bank will seek to invest the largest portion
of the Bank's assets in commercial, consumer and real estate loans.
The Bank's asset/liability mix will likely be monitored on a daily basis
with a monthly report reflecting interest-sensitive assets and
interest-sensitive liabilities being prepared and presented to the Bank's Board
of Directors. The objective of this policy is to control interest-sensitive
assets and liabilities so as to minimize the impact of substantial movements in
interest rates on the Bank's earnings.
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CORRESPONDENT BANKING
Correspondent banking involves the providing of services by one bank to
another bank which cannot provide that service for itself from an economic or
practical standpoint. The Bank will be required to purchase correspondent
services offered by larger banks, including check collections, purchase of
Federal Funds, security safekeeping, investment services, coin and currency
supplies, overline and liquidity loan participations, and sales of loans to or
participations with correspondent banks.
The Bank anticipates that it will sell loan participations to
correspondent banks with respect to loans which exceed the Bank's lending
limit. As compensation for services provided by a correspondent, the Bank may
maintain certain balances with such correspondents in non-interest bearing
accounts.
DATA PROCESSING
The Bank plans to sign a data processing servicing agreement with an
outside service bureau. It is expected that this servicing agreement will
provide for the Bank to receive a full range of data processing services,
including an automated general ledger, deposit accounting, commercial, real
estate and installment lending data processing, payroll, central information
file and ATM processing and investment portfolio accounting.
FACILITIES
Upon commencement of operations, the Bank will open in both temporary
quarters located at the intersection of Highway 138 and Miller's Chapel Road,
Conyers, Georgia and in a branch office located at 1600 Georgia Highway 20,
Conyers, Georgia. Once the Bank's new headquarters has been constructed, which
is expected to occur in September 1998, the Bank will occupy a 7,500 square
feet building containing 8 teller stations, 6 offices, a vault, 3 drive-in
windows, and a conference room. See "BUSINESS OF THE COMPANY -- Premises."
EMPLOYEES
In its first year of operation, the Bank anticipates that it will employ
18 persons on a full-time basis, including 5 officers, and 4 persons on a
part-time basis. The Bank will hire additional persons as needed, including
additional tellers and financial service representatives.
MONETARY POLICIES
The results of operations of the Bank will be affected by credit
policies of monetary authorities, particularly the Federal Reserve Board. The
instruments of monetary policy employed by the Federal Reserve Board include
open market operations in U.S. Government securities, changes in the discount
rate on member bank borrowings, changes in reserve requirements against member
bank deposits and limitations on interest rates which member banks may pay on
time and savings deposits. In view of changing conditions in the national
economy and in the money markets, as well as the effect of action by monetary
and fiscal authorities, including the Federal Reserve Board, no prediction can
be made as to possible future changes in interest rates, deposit levels, loan
demand or the business and earnings of the Bank.
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SUPERVISION AND REGULATION
The Company and the Bank operate in a highly regulated environment, and
their business activities are governed by statute, regulation and
administrative policies. The business activities of the Company and the Bank
are closely supervised by a number of federal regulatory agencies, including
the Federal Reserve Board, the OCC, the Georgia Banking Department , and the
FDIC.
The Company is regulated by the Federal Reserve Board under the federal
Bank Holding Company Act, which requires every bank holding company to obtain
the prior approval of the Federal Reserve Board before acquiring more than 5%
of the voting shares of any bank or all or substantially all of the assets of a
bank, and before merging or consolidating with another bank holding company.
The Federal Reserve Board (pursuant to regulation and published policy
statements) has maintained that a bank holding company must serve as a source
of financial strength to its subsidiary banks. In adhering to the Federal
Reserve Board policy, the Company may be required to provide financial support
to a subsidiary bank at a time when, absent such Federal Reserve Board policy,
the Company may not deem it advisable to provide such assistance.
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994, the restrictions on interstate acquisitions of banks by bank holding
companies were repealed on September 9, 1995, such that the Company and any
other bank holding company located in Georgia is able to acquire a bank located
in any other state, and a bank holding company located outside Georgia can
acquire any Georgia-based bank, in either case subject to certain deposit
percentage and other restrictions. The legislation also provides that, unless
an individual state elects beforehand either (i) to accelerate the effective
date or (ii) to prohibit out-of-state banks from operating interstate branches
within its territory, on or after June 1, 1997, adequately capitalized and
managed bank holding companies will be able to consolidate their multistate
bank operations into a single bank subsidiary and to branch interstate through
acquisitions. De novo branching by an out-of-state bank would be permitted
only if it is expressly permitted by the laws of the host state. The authority
of a bank to establish and operate branches within a state will continue to be
subject to applicable state branching laws. Pursuant to the Riegle-Neal
Interstate Banking and Branching Efficiency Act, the State of Georgia has
recently adopted an interstate banking statute that, beginning on June 1, 1997,
removes the existing restrictions on the ability of banks to branch interstate
through mergers, consolidations and acquisitions.
A bank holding company is generally prohibited from acquiring control of
any company which is not a bank and from engaging in any business other than
the business of banking or managing and controlling banks. However, there are
certain activities which have been identified by the Federal Reserve Board to
be so closely related to banking as to be a proper incident thereto and thus
permissible for bank holding companies, including the following activities:
acting as investment or financial advisor to subsidiaries and certain outside
companies; leasing personal and real property or acting as a broker with
respect thereto; providing management consulting advice to nonaffiliated banks
and nonbank depository institutions; operating collection agencies and credit
bureaus; acting as a futures commission merchant; providing data processing and
data transmission services; acting as an insurance agent or underwriter with
respect to limited types of insurance; performing real estate appraisals;
arranging commercial real estate equity financing; providing securities
brokerage services; and underwriting and dealing in obligations of the United
States, the states and their political subdivisions. In determining whether an
activity is so closely related to banking as to be permissible for bank holding
companies, the Federal Reserve Board is required to consider whether the
performance of such activities by a bank holding company or its subsidiaries
can reasonably be expected to produce such benefits to the public as greater
convenience, increased competition and gains in efficiency that outweigh such
possible adverse effects as undue concentration of resources, decreased or
unfair competition, conflicts of interest and unsound banking practices.
Generally, bank holding companies are required to obtain prior approval of the
Federal Reserve Board to engage in any new activity not previously approved by
the Federal Reserve Board.
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The Company is also regulated by the Georgia Banking Department under
the Georgia Bank Holding Company Act, which requires every Georgia bank holding
company to obtain the prior approval of the Georgia Commissioner of Banking
before acquiring more than 5% of the voting shares of any bank or all or
substantially all of the assets of a bank, or before merging or consolidating
with any other bank holding company. A Georgia bank holding company is
generally prohibited from acquiring ownership or control of 5% or more of the
voting shares of any bank unless the bank being acquired is either a bank for
purposes of the federal Bank Holding Company Act of 1956, or a federal or state
savings and loan association or a savings bank or federal savings bank whose
deposits are insured by the federal deposit insurance program and such bank has
been in existence and continuously operating as a bank for a period of five
years or more prior to the date of acquisition.
As a national bank, the Bank is subject to the supervision of the OCC
and, to a limited extent, the FDIC and the Federal Reserve Board. With respect
to expansion, national banks situated in the State of Georgia are generally
prohibited from establishing branch offices or facilities outside of the county
in which such main office is located, except (i) in adjacent counties in
certain situations, or (ii) by means of a merger, consolidation, or sale of
assets. The Georgia Legislature has adopted legislation which reduces the
limitations imposed on banks situated in the State of Georgia to establish
branch offices. The new law permits a Georgia bank to establish three new or
additional branch banks, de novo, in any county within the State of Georgia, in
addition to establishing branch offices or facilities in adjacent counties and
by merger or consolidation. Moreover, beginning on July 1, 1998, a bank
located in the State of Georgia will be permitted to establish new or
additional branch banks anywhere in the state by relocation of the parent bank
or another branch bank, or by merger, consolidation, or purchase of assets and
assumption of liabilities involving another parent bank or branch bank.
The Bank is also subject to the Georgia banking and usury laws
restricting the amount of interest which it may charge in making loans or other
extensions of credit. In addition, the Bank, as a subsidiary of the Company,
is subject to restrictions under federal law in dealing with the Company and
other affiliates, if any. These restrictions apply to extensions of credit to
an affiliate, investments in the securities of an affiliate and the purchase of
assets from an affiliate.
Loans and extensions of credit by national banks are subject to legal
lending limitations. Under federal law, a national bank may grant unsecured
loans and extensions of credit in an amount up to 15% of its unimpaired capital
and surplus to any person if the loan and extensions of credit are not fully
secured by collateral having a market value at least equal to their face
amount. In addition, a national bank may grant loans and extensions of credit
to a single person up to 10% of its unimpaired capital and surplus, provided
that the transactions are fully secured by readily marketable collateral having
a market value determined by reliable and continuously available price
quotations at least equal to the amount of funds outstanding. This 10%
limitation is separate from, and in addition to, the 15% limitation for
unsecured loans. Loans and extensions of credit may exceed the general lending
limit if they qualify under one of several exceptions. Such exceptions include
certain loans or extensions of credit arising from the discount of commercial
or business paper, the purchase of bankers' acceptances, loans secured by
documents of title, loans secured by U.S. obligations and loans to or
guaranteed by the federal government.
The Bank's loan operations are also subject to certain federal laws
applicable to credit transactions, such as the federal Truth-In-Lending Act
governing disclosures of credit terms to consumer borrowers, the Equal Credit
Opportunity Act prohibiting discrimination on the basis of race, color,
religion, or other prohibited factors in extending credit, the Fair Credit
Reporting Act governing the manner in which consumer debts may be collected by
collection agencies, and the rules and regulations of the various federal
agencies charged with the responsibility of implementing such federal laws.
The deposit operations of the Bank are also subject to the Electronic Funds
Transfer Act and Regulation E issued by the Federal Reserve Board to implement
that act, which govern automatic deposits to and withdrawals from deposit
accounts and
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customers' rights and liabilities arising from the use of automated teller
machines and other electronic banking services.
The Bank is also subject to the provisions of the Community Reinvestment
Act of 1977, which requires the appropriate federal regulator, in connection
with its regular examination of a bank, to assess the bank's record in meeting
the credit needs of the community serviced by the bank, including low- and
moderate-income neighborhoods. The OCC's assessment of a bank's record is made
available to the public. Further, an evaluation of any bank's performance is
required of any bank that has applied, among other things, to establish a new
branch office that will accept deposits, to relocate an existing office, or to
merge or consolidate with, or acquire the assets of or assume the liabilities
of, a federally-regulated financial institution.
Both the Company and the Bank are subject to regulatory capital
requirements imposed by the Federal Reserve Board and the OCC. In 1989, each
of those agencies issued new risk-based capital guidelines for bank holding
companies and banks which made regulatory capital requirements more sensitive
to differences in risk profiles of various banking organizations. The capital
adequacy guidelines issued by the Federal Reserve Board are applied to bank
holding companies on a consolidated basis with the banks owned by the holding
company. The risk capital guidelines of the OCC apply directly to national
banks regardless of whether they are a subsidiary of a bank holding company.
Each agency's requirements (which are substantially similar), provide that
banking organizations must have capital equivalent to 8% of risk-weighted
assets. The risk weights assigned to assets are based primarily on credit
risks. Depending upon the riskiness of a particular asset, it is assigned to a
risk category. For example, securities with an unconditional guarantee by the
United States government are assigned to the lowest risk category. A risk
weight of 50% is assigned to loans secured by owner-occupied one to four family
residential mortgages, provided that certain conditions are met. The aggregate
amount of assets assigned to each risk category is multiplied by the risk
weight assigned to that category to determine the weighted values, which are
added together to determine total risk-weighted assets. The Federal Reserve
Board and the OCC have also implemented new minimum capital leverage ratios to
be used in tandem with the risk-based guidelines in assessing the overall
capital adequacy of banks and bank holding companies. Under the Federal
Reserve Board and OCC rules, banking institutions are required to maintain a
ratio of 3% "Tier 1" capital to total assets (net of goodwill). Tier 1 capital
includes common stockholders equity, noncumulative perpetual preferred stock
and minority interests in the equity accounts of consolidated subsidiaries.
Both the risk-based capital guidelines and the leverage ratio are
minimum requirements, applicable only to top-rated banking institutions.
Institutions operating at or near these levels are expected to have
well-diversified risk, high asset quality, high liquidity, good earnings and in
general, have to be considered strong banking organizations, rated composite 1
under the CAMEL rating system for banks. Institutions with lower ratings and
institutions with high levels of risk or experiencing or anticipating
significant growth would be expected to maintain ratios 100 to 200 basis points
above the stated minimums.
The OCC amended the risk-based capital guidelines applicable to national
banks in an effort to clarify certain questions of interpretation and
implementation, specifically with regard to treatment of originated and
purchased mortgage servicing rights and other intangible assets. The OCC's
guidelines provide that intangible assets are generally deducted from Tier 1
capital in calculating a bank's risk-based capital ratio. However, certain
intangible assets which meet specified criteria ("qualifying intangibles") such
as mortgage servicing rights are retained as a part of Tier 1 capital. The OCC
currently maintains that only mortgage servicing rights and purchased credit
card relationships meet the criteria to be considered qualifying intangibles.
The OCC's guidelines formerly provided that the amount of such qualifying
intangibles that may be included in Tier 1 capital was strictly limited to a
maximum of 25% of total Tier 1 capital. The OCC has amended its guidelines to
increase the limitation on such qualifying intangibles from 25% to 50% of Tier
1 capital and further to permit the inclusion of purchased credit card
relationships as a qualifying intangible asset.
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In addition, the OCC has adopted rules which clarify treatment of asset
sales with recourse not reported on a bank's balance sheet. Among assets
affected are mortgages sold with recourse under Fannie Mae, Freddie Mac and
Farmer Mac programs. The rules clarify that even though those transactions are
treated as asset sales for bank Call Report purposes, those assets will still
be subject to a capital charge under the risk-based capital guidelines.
The OCC and the Federal Reserve Board recently adopted final regulations
revising their risk-based capital guidelines to further ensure that the
guidelines take adequate account of interest rate risk. Interest rate risk is
the adverse effect that changes in market interest rates may have on a bank's
financial condition and is inherent to the business of banking. Under the new
regulations, when evaluating a bank's capital adequacy, the agencies capital
standards now explicitly include a bank's exposure to declines in the economic
value of its capital due to changes in interest rates. The exposure of a
bank's economic value generally represents the change in the present value of
its assets, less the change in the value of its liabilities, plus the change in
the value of its interest rate off-balance sheet contracts. Concurrently, the
agencies issued a joint policy statement to bankers, effective June 26, 1996,
to provide guidance on sound practices for managing interest rate risk. In the
policy statement, the agencies emphasize the necessity of adequate oversight by
a bank's Board of Directors and senior management and of a comprehensive risk
management process. The policy statement also describes the critical factors
affecting the agencies' evaluations of a bank's interest rate risk when making
a determination of capital adequacy. The agencies' risk assessment approach
used to evaluate a bank's capital adequacy for interest rate risk relies on a
combination of quantitative and qualitative factors. Banks that are found to
have high levels of exposure and/or weak management practices will be directed
by the agencies to take corrective action.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"Act"), enacted on December 19, 1991, provides for a number of reforms relating
to the safety and soundness of the deposit insurance system, supervision of
domestic and foreign depository institutions and improvement of accounting
standards. One aspect of the Act involves the development of a regulatory
monitoring system requiring prompt action on the part of banking regulators
with regard to certain classes of undercapitalized institutions. While the Act
did not change any of the minimum capital requirements, it directed each of the
federal banking agencies to issue regulations implementing the monitoring plan.
The Act creates five "capital categories" ("well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and
"critically undercapitalized") which are defined in the Act and which are used
to determine the severity of corrective action the appropriate regulator may
take in the event an institution reaches a given level of undercapitalization.
For example, an institution which becomes "undercapitalized" must submit a
capital restoration plan to the appropriate regulator outlining the steps it
will take to become adequately capitalized. Upon approving the plan, the
regulator will monitor the institution's compliance. Before a capital
restoration plan will be approved, any entity controlling a bank (i.e., holding
companies) must guarantee compliance with the plan until the institution has
been adequately capitalized for four consecutive calendar quarters. The
liability of the holding company is limited to the lesser of five percent of
the institution's total assets or the amount which is necessary to bring the
institution into compliance with all capital standards. In addition,
"undercapitalized" institutions will be restricted from paying management fees,
dividends and other capital distributions, will be subject to certain asset
growth restrictions and will be required to obtain prior approval from the
appropriate regulator to open new branches or expand into new lines of
business.
As an institution drops to lower capital levels, the extent of action to
be taken by the appropriate regulator increases, restricting the types of
transactions in which the institution may engage and ultimately providing for
the appointment of a receiver for certain institutions deemed to be critically
undercapitalized.
The Act also provides that banks have to meet new safety and soundness
standards. In order to comply with the Act, the Federal Reserve Board, the OCC
and the FDIC have adopted regulations defining
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<PAGE> 28
operational and managerial standards relating to internal controls, loan
documentation, credit underwriting, interest rate exposure, asset growth and
compensation, fees and benefits.
Both the capital standards and the safety and soundness standards which
the Act seeks to implement are designed to bolster and protect the deposit
insurance fund.
In response to the directive issued under the Act, the regulators have
issued regulations which, among other things, prescribe the capital thresholds
for each of the five capital categories established by the Act. The following
table reflects the capital thresholds:
<TABLE>
<CAPTION>
Total Risk - Tier 1 Risk - Tier 1
Based Capital Based Capital Leverage
Ratio Ratio Ratio
------------------- ------------------- -------------
<S> <C> <C> <C>
Well capitalized(1) 10% 6% 5%
Adequately Capitalized(1) 8% 4% 4% (2)
Undercapitalized(3) < 8% < 4% < 4% (4)
Significantly Undercapitalized(3) < 6% < 3% < 3%
Critically Undercapitalized - - > 2% (5)
-
---------------------------
</TABLE>
(1) An institution must meet all three minimums.
(2) 3% for composite 1-rated institutions, subject to appropriate federal
banking agency guidelines.
(3) An institution falls into this category if it is below the specified
capital level for any of the three capital measures.
(4) Less than 3% for composite 1-rated institutions, subject to appropriate
federal banking agency guidelines.
(5) Ratio of tangible equity to total assets.
As a national bank, the Bank is subject to examination and review by the
OCC. This examination is typically completed on-site at least annually and is
subject to off-site review at call. The OCC, at will, can access quarterly
reports of condition, as well as such additional reports as may be required by
the national banking laws.
As a bank holding company, the Company is required to file with the
Federal Reserve Board an annual report of its operations at the end of each
fiscal year and such additional information as the Federal Reserve Board may
require pursuant to the Act. The Federal Reserve Board may also make
examinations of the Company and each of its subsidiaries.
The scope of regulation and permissible activities of the Company and
the Bank is subject to change by future federal and state legislation.
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<PAGE> 29
ORGANIZERS AND PRINCIPAL STOCKHOLDERS
The following persons comprise the Organizers of the Company and the
Bank: C. Dean Alford; William L. Daniel; Hazel E. Durden; John A. Fountain,
M.D.; Michael P. Jones; Julia W. Morgan; R. Flynn Nance, D.V.M.; Michael R.
Potts; and Arthur J. Torsiglieri, Jr., M.D. Eight of the Organizers reside in
Conyers, Georgia. One Organizer resides in Greensboro, Georgia, which is
approximately 60 miles from Conyers. The Organizers as a group intend to
subscribe for 155,000 shares or $1,550,000 in the offering which will equal
25.41% of the 610,000 shares to be outstanding upon completion of the minimum
offering. In addition to the subscriptions committed to by the Organizers, the
Organizers have also indicated that they will subscribe for additional shares
in the offering, if necessary, to help the Company complete the offering and
release the proceeds from escrow. In any event, total purchases by the
Organizers will not exceed 180,350 shares or $1,803,500 in the aggregate, which
will equal 29.57% of the 610,000 shares to be outstanding upon completion of
the minimum offering.
Upon commencement of the business of the Bank, Mr. Daniel will receive
options to purchase shares of the Company's Common Stock equal to 1% of the
amount of Common Stock sold in this offering, at an option price of $10.00 per
share. One-half of these options vest when the Bank opens for business and the
remainder vest over two years. See "MANAGEMENT -- Executive Compensation."
All issuance and distribution expenses of the Company, consisting of
organization and offering expenses, will be financed by the Organizers. The
Company has obtained a $300,000 line of credit from The Bankers Bank at an
annual rate of interest of prime, available to pay organizational expenses of
the Bank. Each of the nine Organizers has guaranteed twice his or her pro rata
share of the total line of credit. In the event that the requisite approvals
are obtained, a portion of the proceeds of this offering will be used to repay
any borrowings on the line of credit, to the extent such repayment is
reasonable and not detrimental to the operations of the Bank, and to the extent
such repayment is allowed by the Comptroller and other appropriate bank
regulatory authorities. See "USE OF PROCEEDS." The repayment of organization
expenses, estimated to be $24,000, will be deferred and amortized as expenses
of the Company over the Company's initial sixty months of operations. Offering
expenses, estimated to be $17,500, will be charged against the initial period's
operating results. See Note 1 to "NOTES TO FINANCIAL STATEMENTS."
Each of the Organizers intends to purchase a minimum number of the
shares of Common Stock of the Company offered hereby set forth in the following
table, which also specifies the percentage of Common Stock to be owned by the
Organizers after completion of the minimum offering.
<TABLE>
<CAPTION>
Minimum Number of Shares to be Purchased
----------------------------------------
Number Percent of
Name of Beneficial Owner of Shares Offering
------------------------ --------- ----------
<S> <C> <C>
C. Dean Alford 25,000 4.10%
William L. Daniel 12,500 2.05
Hazel E. Durden 10,000 1.64
John A. Fountain, M.D. 15,000 2.46
Michael P. Jones 25,000 4.10
Julia W. Morgan 25,000 4.10
R. Flynn Nance, D.V.M. 10,000 1.64
Michael R. Potts 17,500 2.87
Arthur J. Torsiglieri, Jr., M.D. 15,000 2.46
-------- ------
TOTAL 155,000 25.41%
</TABLE>
24
<PAGE> 30
Certain of the Organizers anticipate financing all or a portion of
their purchases of the Company's Common Stock. In connection therewith,
SunTrust Bank has agreed to finance up to 75% of the purchase price of the
Company's Common Stock for each Organizer who so elects. Such loans will be
payable over a term of ten years, will be secured by the Company's Common Stock
and will bear interest at an annual rate of prime plus 1% adjusted daily.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY AND THE BANK
The Company's directors and executive officers and the Bank's proposed
directors and executive officers are as follows:
<TABLE>
<CAPTION>
Name Position with Company Position with Bank
- ------------------------------ ----------------------------------- ----------------------------------
<S> <C> <C>
C. Dean Alford Class I Director Director
William L. Daniel President, Chief Executive Officer, President, Chief Executive Officer,
Class I Director Director
Hazel E. Durden Class I Director Director
John A. Fountain, M.D. Class II Director Director
Michael P. Jones Chairman, Class II Director Director
Julia W. Morgan Secretary, Class III Director Director
R. Flynn Nance, D.V.M. Class II Director Director
Michael R. Potts Class III Director Director
Arthur J. Torsiglieri, Jr., M.D. Class III Director Director
</TABLE>
Each of the above persons has been a director of the Company since
February 1997. The Company has a classified Board of Directors whereby
one-third of the members will be elected each year at the Company's Annual
Meeting of Shareholders. Upon such election, each director of the Company will
serve for a term of three years. See "DESCRIPTION OF COMMON STOCK -- Board of
Directors." The Company's officers are appointed by the Board of Directors and
hold office at the will of the Board.
Each of the Bank's proposed directors will, upon approval of the OCC,
serve until the Bank's first shareholders meeting, which meeting will be held
shortly after the Bank receives its charter. It is anticipated that each
interim director will be nominated to serve as director of the Bank at that
meeting. After the first shareholders meeting, directors of the Bank will
serve for a term of one year and will be elected each year at the Bank's Annual
Meeting of Shareholders. The Bank's officers will be appointed by its Board of
Directors and will hold office at the will of the Board.
C. DEAN ALFORD, age 43, has served as President and Chief Executive
Officer of A&C Intercom, Inc. since 1977. Mr. Alford is presently Chairman of
Rockdale Health Systems, a director of the Rockdale Rotary Club, The Boy Scouts
of America (and a 1997 recipient of the Silver Beaver Award from the Atlanta
Area Council of The Boy Scouts of America), Conyers/Rockdale Boys & Girls Club,
Conyers/Rockdale Chamber of Commerce, and the Center for the Visually Impaired.
Mr. Alford is also the Chairman of the Georgia Tech School of Electrical and
Computer Engineering Advisory Board, and is Chairman of the Transition Team
and the Recreation Committee at Rockdale Baptist Church.
25
<PAGE> 31
WILLIAM L. DANIEL, age 47, began his banking career at Citizens &
Southern National Bank in 1972 ultimately rising to the level of Senior Vice
President when he left C&S in 1986. From December 1986 until September 1988,
Mr. Daniel served as an organizer, President and Chief Executive Officer of
the Enterprise National Bank, Atlanta, Georgia. From December 1988 until March
1996, Mr. Daniel served in various executive positions with Bank South
Corporation, ending with the position of Regional President supervising the
bank's 24 branches in Rockdale, South DeKalb, South Fulton, Clayton and Fayette
counties. After the acquisition of Bank South Corporation by NationsBank, Mr.
Daniel became Executive Vice President of First Newton Bank, Covington, Georgia
in April 1996. In October 1996, Mr. Daniel left the employment of First Newton
Bank to begin recruiting and advising the Organizers and, since January 1,
1997, has been devoting his full time to the organization of the Company and
the chartering of the Bank. Mr. Daniel is active in the Good Shepherd
Episcopal Church and is a director of the Rockdale County Water and Sewage
Authority. Mr. Daniel is also Leadership Chairman of the Partners for Tomorrow
Initiative and Chairman of the Rockdale County 1997 March of Dimes Walk America
campaign.
HAZEL E. DURDEN, age 67, is owner and real estate broker at Realty
Metro, a company she founded in 1972. From 1953 until 1992, Mrs. Durden was
employed in a management capacity with the Lovable Company. Mrs. Durden is a
member of the Conyers/Rockdale Chamber of Commerce, the American Business Woman
Association, and the Conyers/Rockdale Pilot Club. Mrs. Durden is also a former
member of the Grievance Committee of Ethics and Relations of the Rockdale Board
of Realtors.
JOHN A. FOUNTAIN, M.D., age 44, has maintained a medical practice
specializing in dermatology in Conyers, Georgia since 1983. Dr. Fountain is a
member of the Medical Association of Georgia, American Academy of Dermatology,
American Society of Dermatology Surgeons, and serves a Clinical Associate
Professor of Dermatology at Emory University School of Medicine. Dr. Fountain
is a former director of the Conyers/Rockdale Chamber of Commerce and is the
Technical Director of boys soccer for the Rockdale County School System. Dr.
Fountain has also served as Honorary Chairman for the Rockdale Emergency Relief
Fund and is a life member of the Georgia Master 4-H Club and the Georgia 4-H
Counselor Association.
MICHAEL P. JONES, age 50, is Managing Partner of Jones & McKnight, P.C.,
Certified Public Accountants, which Mr. Jones founded in 1976. Mr. Jones has
served as an advisory director for Bank South, Conyers, Georgia from 1988 to
1995 and has served as Chairman of the Conyers/Rockdale Chamber of Commerce.
Mr. Jones is a member of the American Institute of CPAs and the Georgia Society
of CPAs. Mr. Jones is also a 1993 Alumnus of the Regional Leadership Institute
and has held numerous leadership positions with several Rockdale County youth
sports organizations. Mr. Jones serves on the Administrative Board and is
Chairman of Stewardship of the Salem United Methodist Church.
JULIA W. MORGAN, age 69, is presently Chief Executive Officer of Ed
Morgan & Associates, Inc., a corporation which she has owned and operated since
1981. Ms. Morgan served as a director of First Bank of Conyers until that bank
merged with Bank South in 1987, at which time she became an advisory director
for Bank South and served as a director for its parent corporation, Bank South
Corporation, until 1996 when the bank merged with NationsBank. Ms. Morgan has
served as the Chairperson for the Rotary Club of Conyers and a is member of the
American Society of Life Underwriters and the Conyers/Rockdale Chamber of
Commerce. Ms. Morgan currently serves on the Rockdale County Impoundment
Authority and the Rockdale County Water and Sewer Authority.
R. FLYNN NANCE, D.V.M., age 41, has since 1987 served as the President
and owner of Honey Creek Veterinary Hospital, Inc., which is a veterinary
medical facility offering medical and surgical care of companion animals in
Conyers, Georgia. Dr. Nance is a member of Conyers/Rockdale Chamber of
Commerce, the American Veterinary Medical Association, the American Heartworm
Society, the Greater Atlanta Veterinary Medical Association, and the Georgia
Veterinary Medical Association. Dr. Nance is also a charter member of the
Rotary Club of Rockdale County.
26
<PAGE> 32
MICHAEL R. POTTS, age 42, is the founder and President of Potts General
Contractors, Inc., a general commercial construction contracting firm started
by Mr. Potts in 1986. Mr. Potts is a member of the Georgia Chapter of
Associate General contractors. Mr. Potts is also currently serving and has
served since 1992 as Director of Construction for the Rockdale County Board of
Commissioners. He is a former Board member and Executive Committee member of
the Conyers/Rockdale Chamber of Commerce, and is an active charter member of
the Haven Fellowship Church.
ARTHUR J. TORSIGLIERI, JR., M.D., age 37, has since June 1990 been a
physician in Conyers, Georgia specializing in ear, nose and throat illnesses
and is President of ENT Specialists, P.C., and is affiliated with Honey Creek
Medical Association, Inc. and Wellbrook Association, Conyers, Georgia. Dr.
Torsiglieri is also a clinical instructor, Department of Surgery, Division of
Otolaryngology at Emory University, Atlanta, Georgia. Dr. Torsiglieri is a
Fellow of the American Academy of Otolaryngology and the American College of
Surgeons. Dr. Torsiglieri is a charter member of the Rotary Club of Rockdale
and serves on the Eagle Board of Review for the Boy Scouts of America in
Rockdale and Newton Counties.
There are no family relationships between any director or executive
officer and any other director or executive officer of the Company.
Directors of the Bank will be paid a director's fee of $150 per regular
board meeting attended and $75 per committee meeting attended.
EXECUTIVE COMPENSATION
On February 21, 1997, the Organizers entered into an Employment
Agreement with William L. Daniel pursuant to which Mr. Daniel will be paid
$7,500 per month as a consultant to the Organizers for the purpose of assisting
with the organization of the Bank and the Company. Once the Bank opens for
business, the Employment Agreement provides that Mr. Daniel shall be employed
as President and Chief Executive Officer of the Bank for a period ending on
February 21, 2000, and shall be entitled to receive an annual base salary of
$100,000, which may be increased at the discretion of the Board of Directors of
the Bank at the end of the calendar quarter in which total deposits equal or
exceed $20 million. Beginning on the second anniversary of the Bank's opening
for business, Mr. Daniel is also eligible to receive a bonus in an amount
determined by the Bank's Board of Directors. The Employment Agreement provides
for the grant of stock options to Mr. Daniel in the amount of 1% of the Common
Stock of the Company sold in this offering at a purchase price of $10.00 per
share pursuant to an Incentive Stock Option Plan to be adopted by the Company.
50% of these options shall vest beginning on the date the Bank commences
business, and 25% of such options shall vest on each of the first and second
anniversaries of the Bank's opening for business. All such options shall be
exercisable for a period of seven (7) years.
The Employment Agreement also provides that Mr. Daniel shall receive an
automobile allowance of $700 per month and such other benefits, such as health,
hospitalization, disability and term life insurance generally made available to
other senior executives of the Company and the Bank.
Mr. Daniel has agreed to a non-compete and non-solicitation provision
pursuant to which he agrees that and through the actual date of termination of
the Employment Agreement and for a period of twelve months thereafter, he shall
not, without the prior written consent of the Bank, within the primary service
area of the Bank either directly or indirectly serve as an executive officer of
any bank, bank holding company, or other financial institution.
The Employment Agreement provides that the Bank may terminate the
employment of Mr. Daniel for any reason, and, in such event, Mr. Daniel shall
be entitled to the payment of his base salary for a period of six months and
for reimbursement of up to $3,000 in fees incurred in connection with
outplacement services.
No other officer or director of the Company have received any cash
compensation for services to the Company.
27
<PAGE> 33
STOCK OPTION PLANS
The Company's Board of Directors will adopt an Incentive Stock Option
Plan (the "Plan") to cover Mr. Daniel's options and for employees who are
contributing significantly to the management or operation of the business of
the Company or its subsidiaries as determined by the committee administering
the Plan. The Plan will be contingent upon approval by the stockholders of the
Company. The Plan will provide for the grant of options at the discretion of a
committee designated by the Board of Directors to administer the Plan. No
person may serve as a member of the committee who is then eligible for a grant
of options under the Plan or has been so eligible for a period of one year
prior to his service on the committee. The option exercise price must be at
least 100% (110% in the case of a holder of 10% or more of the Common Stock) of
the fair market value of the stock on the date the option is granted and the
options are exercisable by the holder thereof in full at any time prior to
their expiration in accordance with the terms of the Plan. Stock options
granted pursuant to the Plan will expire on or before (1) the date which is the
tenth anniversary of the date the option is granted, or (2) the date which is
the fifth anniversary of the date the option is granted in the event that the
option is granted to a key employee who owns more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary
of the Company. It is anticipated that approximately 25,000 shares will be
reserved for issuance under the Plan.
The Board of Directors may, at the Company's first Annual Meeting of
Shareholders after the Bank opens for business, propose for shareholder
approval a directors stock option plan, which will be designed to provide
incentive compensation to directors in the event that the Company's Common
Stock increases in value during the term of such options. The details of this
directors option plan have not yet been determined, but these details will be
disclosed to shareholders in the Company's Proxy Statement issued in connection
with solicitation of shareholder approval of such plan. Further, it is
anticipated that approximately 25,000 shares will be reserved for issuance
under the directors stock option plan.
CERTAIN TRANSACTIONS
Once the Bank opens for business, it is anticipated that it will extend
loans from time to time to certain of the Company's directors, their associates
and members of the immediate families of the directors and executive officers
of the Company. These loans will be made in the ordinary course of business on
substantially the same terms, including interest rates, collateral and
repayment terms, as those prevailing at the time for comparable transactions
with persons not affiliated with the Company or the Bank, and will not involve
more than the normal risk of collectibility or present other unfavorable
features.
28
<PAGE> 34
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Company consists of 10,000,000
shares of Common Stock, $1.00 par value of which no shares are presently issued
and outstanding.
COMMON STOCK
The holders of Common Stock are entitled to elect the members of the
Board of Directors of the Company and such holders are entitled to vote as a
class on all matters required or permitted to be submitted to the shareholders
of the Company.
No holder of any class of stock of the Company has preemptive rights
with respect to the issuance of shares of that or any other class of stock.
Further, with respect to the election of directors, holders of the Common Stock
are not entitled to cumulative voting rights (i.e., a holder of Common Stock
may not cast as many votes as he or she has shares for one particular director).
The holders of Common Stock are entitled to dividends and other
distributions if, as, and when declared by the Board of Directors out of assets
legally available therefor. Upon the liquidation, dissolution, or winding up
of the Company, the holder of each share of Common Stock will be entitled to
share equally in the distribution of the Company's assets. The holders of
Common Stock are not entitled to the benefit of any sinking fund provision.
The shares of Common Stock of the Company are not subject to any redemption
provisions, nor are they convertible into any other security or property of the
Company. All outstanding shares of each class of Common Stock are, and the
shares to be outstanding upon completion of this offering will be, fully paid
and nonassessable.
BOARD OF DIRECTORS
The initial Board of Directors of the Company consists of nine
directors. The directors are divided into three classes, designated Class I,
Class II and Class III. Each class will consist, as nearly as may be possible,
of one- third of the total number of directors constituting the entire Board of
Directors. The term of the Company's initial Class I directors expires at the
Company's first Annual Meeting of Shareholders; the term of the Company's
initial Class II directors expires at the Company's second Annual Meeting of
Shareholders; and the term of the Company's initial Class III directors expires
at the Company's third Annual Meeting of Shareholders. At each Annual Meeting
of Shareholders, successors to the class of directors whose term expires at the
Annual Meeting will be elected for a three- year term. If the number of
directors is changed, an increase or decrease will be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible, and any additional director of any class elected to fill a vacancy
resulting from an increase in such class will hold office for a term that will
coincide with the remaining term of that class, but in no event will a decrease
in the number of directors shorten the term of any incumbent director. Any
director elected to fill a vacancy not resulting from an increase in the number
of directors will have the same remaining term as that of his predecessor.
Except in the case of removal from office, any vacancy on the Board of
Directors, will be filled by a majority vote of the remaining directors then in
office.
Any director may be removed, with or without cause, at any regular or
special meeting of shareholders called for that purpose, and his position
filled by another person nominated and elected for that purpose by the holders
of seventy-five percent (75%) of the outstanding shares of the Company's Common
Stock.
The effect of the classified Board of Directors is to make it more
difficult for a person, entity or group to effect a change in control of the
Company through the acquisition of a large block of the Company's voting stock.
29
<PAGE> 35
REQUIREMENTS FOR SUPERMAJORITY APPROVAL OF TRANSACTIONS
The Company's Articles of Incorporation contain provisions requiring
supermajority stockholder approval to effect certain extraordinary corporate
transactions which are not approved by the Board of Directors. The Articles of
Incorporation require the affirmative vote or consent of the holders of at
least two-thirds (66-2/3%) of the shares of each class of Common Stock of the
Company entitled to vote in elections of directors to approve any merger,
consolidation, disposition of all or a substantial part of the assets of the
Company or a subsidiary of the Company, exchange of securities requiring
stockholder approval or liquidation of the Company ("Covered Transaction"), if
any person who together with his affiliates and associates owns beneficially 5%
or more of any voting stock of the Company ("Interested Person") is a party to
the transaction; provided that three-fourths (75%) of the entire Board of
Directors of the Company has not approved the transaction. In addition, the
Articles of Incorporation require the separate approval by the holders of a
majority of the shares of each class of stock of the Company entitled to vote
in elections of directors which are not beneficially owned, directly or
indirectly, by an Interested Person, of any merger, consolidation, disposition
of all or a substantial part of the assets of the Company or a subsidiary of
the Company, or exchange of securities requiring stockholder approval
("Business Combination"), if an Interested Person is a party to such
transaction; provided, that such approval is not required if (a) the
consideration to be received by the holders of the stock of the Company meets
certain minimal levels determined by a formula under the Articles of
Incorporation (generally the highest price paid by the Interested Person for
any shares which he has acquired), (b) there has been no reduction in the
average dividend rate from that which was obtained prior to the time the
Interested Person became such, and (c) the consideration to be received by
shareholders who are not Interested Persons shall be paid in cash or in the
same form as the Interested Person previously paid for shares of such class of
stock. These Articles of the Company's Articles of Incorporation, as well as
the Article establishing a classified Board of Directors, may be amended,
altered, or repealed only by the affirmative vote or consent of the holders of
at least 75% of the shares of each class of stock of the Company entitled to
vote in elections of directors.
The effect of these provisions is to make it more difficult for a
person, entity or group to effect a change in control of the Company through
the acquisition of a large block of the Company's voting stock.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
As provided under Georgia law, the Company's Articles of Incorporation
provide that a director shall not be personally liable to the Company or its
stockholders for monetary damages for breach of duty of care or any other duty
owed to the Company as a director, except that such provision shall not
eliminate or limit the liability of a director (a) for any appropriation, in
violation of his duties, of any business opportunity of the Company, (b) for
acts or omissions which involve intentional misconduct or a knowing violation
of law, (c) for unlawful corporate distributions, or (d) for any transaction
from which the director received an improper personal benefit.
Article VI of the Company's Bylaws provides that the Company shall
indemnify a director who has been successful in the defense of any proceeding
to which he was a party or in defense of any claim, issue or matter therein
because he is or was a director of the Company, against reasonable expenses
incurred by him in connection with such defense.
The Company's Bylaws also provide that the Company is required to
indemnify any director, officer, employee or agent made a party to a proceeding
because he is or was a director, employee or agent against liability incurred
in the proceeding if he acted in a manner he believed in good faith or to be in
or not opposed to the best interests of the Company and, in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Determination concerning whether or not the applicable standard of
conduct has been met can be made by (a) a disinterested majority of the Board
of Directors, (b) a majority
30
<PAGE> 36
of a committee of disinterested directors, (c) independent legal counsel, or
(d) an affirmative vote of a majority of shares held by disinterested
stockholders. No indemnification may be made to or on behalf of a director,
officer, employee or agent (i) in connection with a proceeding by or in the
right of the Company in which such person was adjudged liable to the Company or
(ii) in connection with any other proceeding in which such person was adjudged
liable on the basis that personal benefit was improperly received by him.
The Company may, if authorized by its stockholders by a majority of
votes which would be entitled to be cast in a vote to amend the Company's
Articles of Incorporation, indemnify or obligate itself to indemnify a
director, officer, employee or agent made a party to a proceeding, including a
proceeding brought by or in the right of the Company.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
STATUTORY PROVISIONS
The State of Georgia has statutory provisions relating to business
combinations between a Georgia corporation and an "interested shareholder" that
outline the statutory requirements to effect such transactions. However, the
law provides that these sections only apply if the corporation specifically
provides in its bylaws that such requirements are applicable. The Company has
not so provided in its bylaws and, therefore, these statutory anti-takeover
provisions do not apply to the Company.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or
the Bank is a party or of which any of their properties are subject; nor are
there material proceedings known to the Company to be contemplated by any
governmental authority; nor are there material proceedings known to the
Company, pending or contemplated, in which any director, officer or affiliate
or any principal security holder of the Company, or any associate of any of the
foregoing is a party or has an interest adverse to the Company or the Bank.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock
offered hereby will be passed upon for the Company by Smith, Gambrell &
Russell, LLP, Suite 1800, 3343 Peachtree Road, N.E., Atlanta, Georgia 30326,
counsel to the Company.
EXPERTS
The financial statements of Rockdale National Bancshares, Inc. as of
February 28, 1997 and for the period from Inception (February 13, 1997) to
February 28, 1997 (the organization period) included herein and elsewhere in
the Registration Statement have been included herein and in the Registration
Statement in reliance upon the reports of Bricker & Melton, P.A., independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.
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<PAGE> 37
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form SB-2
(herein, together with all amendments thereto, called the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the shares of Common Stock offered hereby. This
Prospectus does not contain all of the information included in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to the Company and the Common Stock, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto which may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549 and at the regional offices of the Commission located at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such
information can be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549. Such documents may also be obtained at the web site maintained by
the Commission (http://www.sec.gov). In addition, the Company will provide,
without charge, to each person who receives a Prospectus, upon written or oral
request of such person, a copy of any of the information that was incorporated
by reference in the Prospectus. Such request shall be directed to the Company
either at its temporary mailing address at P. O. Box 82030, Conyers, Georgia
30208 or at its temporary telephone number at (770) 760-7573.
32
<PAGE> 38
==================================
ROCKDALE NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
FINANCIAL STATEMENTS
FEBRUARY 28, 1997
==================================
<PAGE> 39
ROCKDALE NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
================================================================================
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Certified Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Balance Sheet--February 28, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Statement of Operations for the Period from
Inception (February 13, 1997) to February 28, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statement of Changes in Stockholders' Equity
for the Period from Inception (February 13, 1997) to February 28, 1997 . . . . . . . . . . . . . . . . . . . . . F-4
Statement of Cash Flows for the Period from
Inception (February 13, 1997) to February 28, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Notes to Financial Statements as of February 28, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
</TABLE>
<PAGE> 40
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Rockdale National Bancshares, Inc.
We have audited the accompanying balance sheet of Rockdale National
Bancshares, Inc. (a development stage corporation), as of February 28, 1997,
and the related statements of operations, changes in stockholders' equity and
cash flows for the period from inception (February 13, 1997) to February 28,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rockdale National
Bancshares, Inc. as of February 28, 1997, and the results of its operations and
its cash flows for the period from inception (February 13, 1997) to February
28, 1997, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
Rockdale National Bancshares, Inc. will continue as a going concern. As
discussed in note 1 to the financial statements, the Company is in the
organization stage and has not commenced operations. Also, as discussed in note
2, the Company's future operations are dependent on obtaining capital through
an initial stock offering and obtaining the necessary final regulatory
approvals to operate under a commercial bank charter. These factors and the
expense associated with development of a new banking institution raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are described in note 2. The
financial statements do not include any adjustments relating to the
recoverability of reported asset amounts or the amount of liabilities that
might result from the outcome of the uncertainty.
BRICKER & MELTON, P.A.
Duluth, Georgia
March 18, 1997, except for
Note 4, as to which
the date is May 5, 1997
F-1
<PAGE> 41
ROCKDALE NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
FEBRUARY 28, 1997
================================================================================
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $ 26,322
-------------
Current Assets 26,322
-------------
Organization costs 15,271
Deferred expenses 25,500
Other assets--earnest money 10,000
-------------
TOTAL ASSETS $ 77,093
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable--organizers (Notes 2 and 4) $ 85,000
-------------
Current liabilities 85,000
-------------
TOTAL LIABILITIES 85,000
-------------
Commitments (Note 3)
STOCKHOLDERS' EQUITY
Common stock, par value $1.00 per share; 10,000,000 shares
authorized; organizational shares 50
Additional paid-in capital 450
Deficit accumulated during the development stage (8,407)
-------------
TOTAL STOCKHOLDERS' EQUITY (7,907)
-------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 77,093
=============
</TABLE>
See accompanying notes to financial statments.
F-2
<PAGE> 42
ROCKDALE NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (FEBRUARY 13, 1997) TO FEBRUARY 28,1997
================================================================================
<TABLE>
<S> <C>
Expenses:
Management consulting fees $ 7,941
Other operating 466
---------
Net loss $ 8,407
=========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 43
ROCKDALE NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (FEBRUARY 13, 1997) TO FEBRUARY 28, 1997
================================================================================
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Paid-in Development
Stock Capital Stage Total
------------- -------------- ---------------- ----------
<S> <C> <C> <C> <C>
Proceeds from the sale of
organization shares $ 50 $ 450 $ -- $ 500
Net loss -- -- (8,407) (8,407)
------------- -------------- ---------------- ----------
Balance, February 28, 1997 $ 50 $ 450 $ (8,407) $ (7,907)
============= ============== ================ ==========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 44
ROCKDALE NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (FEBRUARY 13, 1997) TO FEBRUARY 28, 1997
================================================================================
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (8,407)
Adjustments to reconcile net income to net cash provided by operating
activities:
Increase in other assets--earnest money (10,000)
------------
NET CASH USED BY OPERATING ACTIVITIES (18,407)
------------
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs (15,271)
Deferred expenses (25,500)
------------
NET CASH USED BY INVESTING ACTIVITIES (40,771)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of organization shares 500
Proceeds from loan by organizers 85,000
------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 85,500
------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 26,322
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD --
------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 26,322
============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 45
ROCKDALE NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
================================================================================
(1) ORGANIZATION
Rockdale National Bancshares, Inc. (the "Company") was formed to
establish Rockdale National Bank (the Bank). The organizers of the
Company filed a joint application to charter the Bank with the Office of
the Comptroller of the Currency (OCC) and the Federal Deposit Insurance
Corporation (FDIC). Upon receipt of preliminary approval from the OCC, the
Company will file an application with the Board of Governors of the
Federal Reserve System and the Georgia Department of Banking and Finance
to become a bank holding company. Provided the necessary capital is raised
and the necessary regulatory approvals are received, it is expected that
operations will commence in the fourth quarter of 1997.
The accounting and reporting policies of the Company conform to
generally accepted accounting principles and to general practices within
the banking industry.
The Company plans to raise a minimum of $6,100,000 through an offering
of its $1.00 par value Common Stock. The Organizers and directors expect
to subscribe for a minimum of approximately $1,550,000 of the Company's
stock.
Upon the completion of the sale of Common Stock and the opening of the
Company, incurred organization costs, estimated to be $24,000 (consisting
principally of legal, accounting and incorporation fees), will be deferred
and amortized over the Company's initial sixty months of operations.
Offering expenses, estimated to be $17,500 (consisting principally of
direct, incremental costs of the stock offering), will be deducted from
the proceeds of the offering, and pre-opening expenses (consisting
principally of salaries, overhead and other operating costs) will be
charged against the initial period's operating results.
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand and amounts due from bank.
(2) LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The Company incurred a net loss of $8,407 for the period from inception
(February 13, 1997) to February 28, 1997. Operations through February 28,
1997, relate primarily to expenditures for incorporating and organizing
the Company.
At February 28, 1997, the Company has been totally funded by
the Organizers. In April 1997, the Organizers established lines of credit
to pay back the Organizers (without interest) and provide additional
operating funds until permanent funding is obtained. See Note 4.
Management believes that the current level of expenditures is well within
the financial capabilities of the Organizers and adequate to meet existing
obligations and fund current operations. However, obtaining final
regulatory approvals and commencing banking operations is dependent on
successfully completing the stock offering and obtaining regulatory
approval.
To provide permanent funding for its operations, the company is
currently anticipating offering a minimum of 610,000 and a maximum of
800,000 shares of its Common Stock, $1.00 par value, at $10.00 per share
in an initial public offering. Costs related to the organization and
registration of the company's Common Stock will be paid from the gross
proceeds of the offering. Should subscriptions for the minimum offering
not be obtained, amounts paid by subscribers with their subscriptions will
be returned and the offer withdrawn.
F-6
<PAGE> 46
ROCKDALE NATIONAL BANCSHARES, INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
================================================================================
(3) COMMITMENTS
The Company entered into an employment agreement with its President and
Chief Executive Officer. The agreement continues for a period ending on
February 21, 2000, and provides for an annual base salary of $90,000 per
year until the Bank opens for business and $100,000 per year after
opening, in addition to a $700 per month automobile allowance and such
other benefits as health, hospitalization, disability and term life
insurance generally made available to other senior executives of the
Company and the Bank.
The Company has entered into an option agreement dated February 4,
1997, to acquire a 2.50 acre tract of land located at the intersection of
1000 Georgia Highway 138 and Miller's Chapel Road for a total purchase
price of $424,160 from a party unaffiliated with the Organizers or the
Company. The Company intends to construct its headquarters building on
this property. The building will contain approximately 7,500 square feet
of finished space at a cost of approximately $937,500. The sum of $5,000
has been paid as earnest money, and the contract is contingent upon
receiving Bank Charter approval from the required regulatory agencies.
Until construction of the Bank building is complete, the Company will
temporarily operate out of offices in a modular bank facility also located
at the intersection of 1000 Georgia Highway 138 and Miller's Chapel Road.
The Company will lease the facility pursuant to a month-to-month lease at
the monthly rental of $3,300 after spending approximately $20,000 for site
preparation and facility set-up work. It is estimated that the Company and
the Bank will operate out of this temporary facility for approximately
twelve months until construction of the headquarters building has been
completed.
In addition to its headquarters facility, the Company's banking
subsidiary plans to open a small branch office facility located at 1600
Georgia Highway 20, Conyers, Georgia. This branch facility will be
acquired for a purchase price of approximately $385,000. It is anticipated
that the facility will require approximately $150,000 in improvements
prior to its opening. The sum of $5,000 has been paid as earnest money,
and the contract is contingent upon receiving Bank Charter approval from
the required regulatory agencies.
F-7
<PAGE> 47
ROCKDALE NATIONAL BANCSHARES, INC.
(A Development Stage Corporation)
NOTES TO FINANCIAL STATEMENTS
(4) SUBSEQUENT EVENTS
On April 2, 1997, the Organizers obtained a $450,000
line of credit from a bank at .50 percent below adjustable prime rate or
currently 8.00 percent. The line of credit is unsecured and requires
interest only payments on a quarterly basis, with total principal plus interest
due at maturity on July 2, 1998. Personal guarantees of the Organizers, up to
$100,000 each, were required by the lender. This line of credit is intended to
fund the branch building purchase and renovations. As of May 5, 1997,
approximately $399,900 has been drawn against the line of credit.
On April 4, 1997, the Organizers obtained a $300,000 line of credit
from a bank at .50 percent below adjustable prime rate or currently 8.00
percent. The line of credit is unsecured and requires interest only payments
on a quarterly basis, with total principal plus interest due at maturity on
April 4, 1998. Personal guarantees of the Organizers, up to $66,667 each, were
required by the lender. This line of credit has been used to repay (without
interest) the Organizers' initial funding of the Company and to provide
additional operating funds until permanent funding is obtained. As of May 5,
1997, approximately $105,000 has been drawn against this line of credit.
<PAGE> 48
APPENDIX "A"
Rockdale National Bancshares, Inc.
P.O. Box 82030
Conyers, Georgia 30208
March 28, 1997
The Bankers Bank
3715 Northside Parkway
300 North Creek
Suite 800
Atlanta, Georgia 30327
Attention: William R. Burkett
Gentlemen:
Rockdale National Bancshares, Inc., a Georgia corporation (the
"Company"), proposes to offer for sale up to 800,000 shares of its $1.00 par
value common stock (the "Common Stock"), which shares shall be registered under
the Securities Act of 1933, as amended, by the filing of a Registration
Statement on Form SB-2 with the Securities and Exchange Commission. Shares
will be offered at a price of $10.00 each. The minimum subscription per
subscriber is 100 shares.
(1) The Company hereby appoints and designates you as Escrow Agent
for the purposes set forth herein. By your signature hereto, you acknowledge
and accept said appointment and designation. The Company understands that you,
by accepting said appointment and designation, in no way endorse the merits of
the offering of the shares described herein. The Company agrees to notify any
person acting on its behalf that your position as Escrow Agent does not
constitute such an endorsement, and to prohibit said persons from the use of
your name as an endorser of such offering. The Company further agrees to allow
you to review any sales literature in which your name appears and which is used
in connection with such offering.
(2) The Company shall deliver all payments received in purchase of
the shares (the "Subscription Funds") to you in the form in which they are
received by noon of the next business day after their receipt by the Company,
and the Company shall deliver to you within five (5) calendar days copies of
written acceptances of the Company for shares in the Company for which the
Subscription Funds represent payment. Upon receipt of such written acceptance
by the Company, the Escrow Agent shall deposit such funds into the Escrow
Account. The Company shall also deliver to you copies of completed
Subscription Agreements for each subscriber, along with such subscriber's
name, address, number of shares subscribed and social security or taxpayer
identification number.
(3) Subscription Funds shall be held and disbursed by you in
accordance with the terms of this Agreement.
A-1
<PAGE> 49
The Bankers Bank
March 28, 1997
(4) In the event any Subscription Funds are dishonored for payment
for any reason, you agree to orally notify the Company immediately thereof and
to confirm same in writing and to return the dishonored Subscription Funds to
the Company in the form in which they were delivered to you.
(5) Should the Company elect to accept a subscription for less than
the number of shares shown in the purchaser's Subscription Agreement, by
indicating such lesser number of shares on the written acceptance of the
Company transmitted to you, you shall deposit such payment in the escrow
account and then remit within ten (10) calendar days after such deposit to such
subscriber at the address shown in his Subscription Agreement that amount of
his Subscription Funds in excess of the amount which constitutes full payment
for the number of subscribed shares accepted by the Company as shown in the
Company's written acceptance, without interest or diminution. Said address
shall be provided by the Company to you as requested.
(6) (a) As used herein, the term "Total Receipts" shall mean the
sum of all Subscription Funds delivered to you pursuant to Paragraph (3)
hereof, less all Subscription Funds returned pursuant to Paragraphs (4) and (5)
hereof.
(b) As used herein, the term "Expiration Date" shall mean the
date which marks the 90th day after the date of the Prospectus; provided,
however, in the event that you are given oral notification, followed in
writing, by the Company that it has elected to extend the offering for an
additional period of 90 days after the initial period, then the Expiration Date
shall mean the date which marks the 180th day after the date of the Prospectus;
provided further, in the event that you are given oral notification, followed
in writing, by the Company that it has elected to extend the offering for an
additional period of 90 days after the first extension, then the Expiration
Date shall mean the date which marks the 270th day after the date of the
Prospectus; provided further, in the event you are given oral notification,
followed in writing, by the Company that it has elected to extend the offering
for an additional period of 90 days after the second extension, then the
Expiration Date shall mean the date which marks the 360th day after the date of
the Prospectus..
(c) If Total Receipts equal $6,100,000 on or before the
Expiration Date, you shall, on the Closing Date, no later than 10:00 A.M.,
Eastern Daylight Time, upon receipt of 24-hour written instructions from the
Company, remit all amounts representing Subscription Funds, plus any profits
or earnings thereon after deducting your fees, if any, held by you pursuant
hereto in accordance with such instructions.
(7) If (i) Total Receipts are less than $6,100,000 as of 5:00
o'clock P.M., Eastern Daylight Time on the Expiration Date, or (ii) the
offering is canceled by the Company at any time prior to the Expiration Date,
then you shall promptly remit to each subscriber at the address set forth in
his Subscription Agreement an amount equal to the amount of his Subscription
Funds thereunder, adjusted for his allocated share of any net profits earned
on the investment of the Subscription Funds as set forth in Paragraph 8, below.
The Company hereby agrees to provide to you in writing the specific
allocations of net profits attributable to each subscriber hereunder.
(8) Pending disposition of the Subscription Funds under this
Agreement, you are authorized, upon oral instructions, followed in writing,
given by William L. Daniel to invest Subscription Funds in Federal Funds, in
short- term direct obligations of the United States government, in short-term
FDIC or FSLIC insured certificates of deposit, and/or in Fidelity Institutional
U.S. Treasury Cash Portfolio, for short-term obligations of the United States
government, but in any case with maturities of 90 days or less. For purposes
of Paragraph 7 above, the specific allocations of net profits attributable to
each subscriber shall be determined by the Company as follows; each
subscriber's allocated share of earnings on the Subscription Funds, after
A-2
<PAGE> 50
The Bankers Bank
March 28, 1997
deducting your fees, if any, shall be that fraction (i) the numerator of which
is the dollar amount of such subscriber's accepted subscription multiplied by
the number of days between the date of acceptance of the purchaser's
subscription and the date of the offering's termination, inclusive (the
subscriber's "Time Subscription Factor"), and (ii) the denominator of which is
the aggregate Time Subscription Factors of all purchasers depositing
Subscription Funds in the escrow account.
(9) Your obligations as Escrow Agent hereunder shall terminate upon
your transferring all funds you hold hereunder pursuant to the terms of
Paragraphs (6) or (7) herein, as applicable.
(10) As used herein, "Closing Date" shall mean the third business day
following the earlier of (i) the date of receipt by you of Total Receipts
aggregating $6,100,000 and executed Subscription Agreements and copies of
written acceptances of the Company in connection therewith.
(11) You shall be protected in acting upon any written notice,
request, waiver, consent, certificate, receipt, authorization, or other paper
or document which you believe to be genuine and what it purports to be.
(12) You shall not be liable for anything which you may do or refrain
from doing in connection with this Escrow Agreement, except your own gross
negligence or willful misconduct.
(13) You may confer with legal counsel in the event of any dispute or
question as to the construction of any of the provisions hereof, or your
duties hereunder, and you shall incur no liability and you shall be fully
protected in acting in accordance with the opinions and instructions of such
counsel. Any and all expenses and legal fees in this regard are payable from
the Subscription Funds unless paid by the Company.
(14) In the event of any disagreement between the Company and any
other person resulting in adverse claims and demands being made in connection
with any Subscription Funds involved herein or affected hereby, you shall be
entitled to refuse to comply with any such claims or demands as long as such
disagreement may continue, and in so refusing, shall make no delivery or other
disposition of any Subscription Funds then held by you under this Agreement,
and in so doing you shall be entitled to continue to refrain from acting until
(a) the right of adverse claimants shall have been finally settled by binding
arbitration or finally adjudicated in a court assuming and having jurisdiction
of the Subscription Funds involved herein or affected hereby or (b) all
differences shall have been adjusted by agreement and you shall have been
notified in writing of such agreement signed by the parties thereto. In the
event of such disagreement, you may, but need not, tender into the registry or
custody of any court of competent jurisdiction all money or property in your
hands under the terms of this Agreement, together with such legal proceedings
as you deem appropriate and thereupon to be discharged from all further duties
under this Escrow Agreement. The filing of any such legal proceeding shall not
deprive you of your compensation earned prior to such filing. You shall have
no obligation to take any legal action in connection with this Agreement or
towards its enforcement, or to appear in, prosecute or defend any action or
legal proceeding which would or might involve you in any cost, expense, loss or
liability unless indemnification shall be furnished.
(15) You may resign for any reason, upon thirty (30) days written
notice to the Company. Upon the expiration of such thirty (30) day notice
period, you may deliver all Subscription Funds and copies of Subscription
Agreements in your possession under this Escrow Agreement to any successor
Escrow Agent appointed by the Company, or if no successor Escrow Agent has been
appointed, to any court of competent jurisdiction. Upon either such delivery,
you shall be released from any and all liability under this Escrow Agreement.
A termination under this paragraph shall in no way change the terms of
paragraphs 15 and 16
A-3
<PAGE> 51
The Bankers Bank
March 28, 1997
affecting reimbursement of expenses, indemnity and fees. You shall have the
right to deduct from the Subscription Funds transferred to any successor Escrow
Agent any outstanding and unpaid expenses or fees.
(16) You agree to charge your customary and normal fee for your
services hereunder. A copy of the current schedule is attached hereto. The
fee schedule may be modified from time to time. The acceptance fee and
expenses shall be paid in advance or at closing by the Company. Any subsequent
fees and expenses will be paid by the Company upon receipt of invoice.
(17) All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if sent by registered or certified mail,
return receipt requested, to the respective addresses set forth herein. You
shall not be charged with knowledge of any fact, including but not limited to
performance or non-performance of any condition, unless you have actually
received written notice thereof from the Company or its authorized
representative clearly referring to this Escrow Agreement.
(18) The rights created by this Escrow Agreement shall inure to the
benefit of, and the obligations created hereby shall be binding upon the
successors and assigns of you and the parties hereto. Notwithstanding the
foregoing, the Company may not assign its rights hereunder without your prior
written consent.
(19) This Escrow Agreement shall be construed and enforced according
to the laws of the State of Georgia.
(20) This Escrow Agreement shall terminate and you shall be
discharged of all responsibility hereunder at such time as you shall have
completed your duties hereunder.
(21) This Escrow Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
(22) This Escrow Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the transactions described
herein and supersedes all prior agreements or understandings, written or oral,
between the parties with respect thereto. Further, this Escrow Agreement may
only be amended by a written amendment signed by the parties hereto.
(23) If any provision of this Escrow Agreement is declared by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
(24) The Company shall provide you with its Employer Identification
Number as assigned by the Internal Revenue Service. Additionally, the Company
shall complete and return to you any and all tax forms or reports required to
be maintained or obtained by you. In the event that Subscription Funds are
returned to subscribers pursuant to paragraph 7 hereof, you shall, based upon
the information available to you, file with the Internal Revenue Service and
send to each subscriber a Form 1099-INT with respect to contributions of
interest to subscribers. All interest or other income earned under this Escrow
Agreement which is payable to the Company pursuant to paragraph 6 hereof shall
be allocated and paid as directed by the Company and reported to the Internal
Revenue Service as having been so allocated and paid.
A-4
<PAGE> 52
The Bankers Bank
March 28, 1997
(25) Your signature hereto is your consent that a signed copy hereof
may be filed with the various regulatory authorities of the State of Georgia
and with any Federal Government agencies or regulatory authorities.
Please indicate your acceptance of this Agreement by executing a copy
of this letter and returning it to the undersigned.
Very truly yours,
ROCKDALE NATIONAL BANCSHARES, INC.
By: /s/ William L. Daniel
-------------------------------------
William L. Daniel
President and Chief Executive Officer
Attest:
/s/ Julia W. Morgan
- -----------------------------------
Secretary
(CORPORATE SEAL)
ACCEPTED AND AGREED:
THE BANKERS BANK
By: /s/ William R. Burkett
-------------------------------------
William R. Burkett
Vice President
A-5
<PAGE> 53
THE BANKERS BANK
CURRENT FEE STRUCTURE FOR ACTING AS BANK ESCROW AGENT
1. $2,000 acceptance fee payable when the escrow account is broken for
maintaining Rockdale National Bancshares, Inc. Escrow Account.
2. $15.00 service charge accrued monthly and deducted from the Escrowed Funds
prior to release.
3. $20.00 fee per check if the escrow account has to be refunded due to a
failure to complete the subscription.
A-6
<PAGE> 54
APPENDIX "B"
ROCKDALE NATIONAL BANCSHARES, INC.
SUBSCRIPTION AGREEMENT
To: Rockdale National Bancshares, Inc.
P.O. Box 82030
Conyers, Georgia 30208
Gentlemen:
You have informed me that Rockdale National Bancshares, Inc., a
Georgia corporation (the "Company"), is offering 800,000 shares of its $1.00
par value common stock (the "Common Stock") at a price of $10.00 per share as
described in and offered pursuant to the Prospectus furnished to the
undersigned herewith (the "Prospectus"). In addition, you have informed me
that the minimum subscription is 100 shares.
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
undersigned hereby tenders this subscription, together with payment in United
States currency by check, bank draft or money order payable to "The Bankers
Bank, Escrow Agent for Rockdale National Bancshares, Inc." or any other
consideration satisfactory to the Company (the "Funds"), representing the
payment of $10.00 per share for the number of shares of the Common Stock
indicated below.
2. ACCEPTANCE OF SUBSCRIPTION. It is understood and agreed that the
Company shall have the right to accept or reject this subscription in whole or
in part, for any reason whatsoever. The Company shall reject this
subscription, if at all, in writing within ten business days after receipt of
this subscription. The Company may reduce the number of shares for which the
undersigned has subscribed, indicating acceptance of less than all of the
shares subscribed on its written form of acceptance.
3. ACKNOWLEDGEMENTS. The undersigned hereby acknowledges that he has
received a copy of the Prospectus and agrees to be bound by the terms of this
Agreement and the Escrow Agreement.
4. REVOCATION. The undersigned agrees that once this Subscription
Agreement is accepted by the Company, it may not be withdrawn by him.
Therefore, until the earlier of the expiration of ten business days after
receipt by the Company of this Subscription Agreement or acceptance of this
Subscription Agreement by the Company, the undersigned may withdraw his or her
subscription and receive a full refund of the subscription price. The
undersigned agrees that, except as provided in this Section 4, he shall not
cancel, terminate or revoke this Subscription Agreement or any agreement of the
undersigned made hereunder and that this Subscription Agreement shall survive
the death or disability of the undersigned.
BY EXECUTING THIS SUBSCRIPTION AGREEMENT, THE SUBSCRIBER IS NOT
WAIVING ANY RIGHTS HE MAY HAVE UNDER FEDERAL SECURITIES LAWS, INCLUDING THE
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934.
B-1
<PAGE> 55
Please fill in the information requested below, make your check
payable to "The Bankers Bank, Escrow Agent for Rockdale National Bancshares,
Inc.," and mail Subscription Agreement, Stock Certificate Registration
Instructions and check to the attention of William L. Daniel, President,
Rockdale National Bancshares, Inc., P.O. Box 82030, Conyers, Georgia 30208.
- ------------------------------- -------------------------------------
No. of Shares Subscribed (Signature of Subscriber)
$
------------------------------ -------------------------------------
Funds Tendered ($______________ Name (Please Print or Type)
per share subscribed)
Date:
--------------------------------
Phone Number:
(Home)
-------------------------------
(Office)
-----------------------------
Residence Address:
-------------------------------------
-------------------------------------
-------------------------------------
City, State and Zip Code
-------------------------------------
Social Security Number or other
Taxpayer Identification Number
B-2
<PAGE> 56
STOCK CERTIFICATE REGISTRATION INSTRUCTIONS
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Additional Name if Tenant in Common or Joint Tenant
Mailing Address:
----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Social Security Number or other Taxpayer Identification Number
-----------------
Number of Shares to be registered in above name(s):
----------------------------
Legal form of ownership:
<TABLE>
<S> <C>
Individual Joint Tenants with Rights of Survivorship
- --- ---
Tenants in Common Uniform Gift to Minors
- --- ---
Other
- ---- -------------------------
</TABLE>
INFORMATION AS TO BANKING INTERESTS
1. As a prospective stockholder I would be interested in the following
services checked below:
<TABLE>
<CAPTION>
PERSONAL BUSINESS
<S> <C> <C> <C>
(a) Checking Account ___ ___
(b) Savings Account ___ ___
(c) Certificates of Deposit ___ ___
(d) Individual Retirement Accounts ___ ___
(e) Checking Account Overdraft Protection ___ ___
(f) Consumer Loans (Auto, etc.) ___ ___
(g) Commercial Loans ___ ___
(h) Equity Line of Credit ___ ___
(i) Mortgage Loans ___ ___
(j) Revolving Personal Credit Line ___ ___
(k) Safe Deposit Box ___ ___
(l) Automatic Teller Machines (ATM's) ___ ___
</TABLE>
2. I would like our new bank to provide the following additional services:
(a)
(b)
B-3
<PAGE> 57
FORM OF ACCEPTANCE
Rockdale National Bancshares, Inc.
P.O. Box 82030
Conyers, Georgia 30208
To:
Dear Subscriber:
Rockdale National Bancshares, Inc. (the "Company") acknowledges
receipt of your subscription for _________________ shares of its $1.00 par
value Common Stock and your check for $__________.
The Company hereby accepts your subscription for the purchase of _____
shares of its Common Stock, at $10.00 per share, for an aggregate of
$__________, effective as of the date of this letter.
YOUR STOCK CERTIFICATE(S) REPRESENTING SHARES OF COMMON STOCK DULY
AUTHORIZED AND FULLY PAID WILL BE ISSUED TO YOU AS SOON AS PRACTICABLE AFTER
ALL SUBSCRIPTION FUNDS ARE RELEASED TO THE COMPANY FROM THE SUBSCRIPTION ESCROW
ACCOUNT, ALL AS DESCRIBED IN THE SUBSCRIPTION AGREEMENT EXECUTED BY YOU AND IN
THE PROSPECTUS FURNISHED TO YOU. IN THE EVENT THAT (I) THE OFFERING IS
CANCELED, OR (II) THE MINIMUM NUMBER OF SUBSCRIPTIONS (610,000 SHARES) IS NOT
OBTAINED, OR (III) THE COMPANY SHALL NOT HAVE RECEIVED APPROVAL FROM THE
FEDERAL RESERVE BOARD AND THE GEORGIA BANKING DEPARTMENT TO BECOME A BANK
HOLDING COMPANY, OR (IV) THE BANK SHALL NOT HAVE RECEIVED PRELIMINARY CHARTER
APPROVAL FROM THE COMPTROLLER AND APPROVAL FOR DEPOSIT INSURANCE FROM THE
FEDERAL DEPOSIT INSURANCE CORPORATION, YOUR SUBSCRIPTION FUNDS WILL BE RETURNED
TO YOU, ADJUSTED FOR NET PROFITS FROM THE INVESTMENT OF SUCH FUNDS, IF ANY, AS
DESCRIBED IN THE PROSPECTUS.
IF THIS ACCEPTANCE IS FOR A LESSER NUMBER OF SHARES THAN THAT NUMBER
SUBSCRIBED BY YOU AS INDICATED IN YOUR SUBSCRIPTION AGREEMENT, YOUR PAYMENT FOR
SHARES OF COMMON STOCK IN EXCESS OF THE NUMBER OF SHARES ACCEPTED HEREBY WILL
BE REFUNDED TO YOU BY MAIL, WITHOUT INTEREST, WITHIN TEN (10) DAYS OF THE DATE
HEREOF.
VERY TRULY YOURS,
ROCKDALE NATIONAL BANCSHARES, INC.
By:
-------------------------------------
WILLIAM L. DANIEL
PRESIDENT and CHIEF EXECUTIVE OFFICER
B-4
<PAGE> 58
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
As provided under Georgia law, the Company's Articles of
Incorporation provide that a director shall not be personally liable to the
Company or its stockholders for monetary damages for breach of duty of care or
any other duty owed to the Company as a director, except that such provision
shall not eliminate or limit the liability of a director (a) for any
appropriation, in violation of his duties, of any business opportunity of the
Company, (b) for acts or omissions which involve intentional misconduct or a
knowing violation of law, (c) for unlawful corporate distributions, or (d) for
any transaction from which the director received an improper personal benefit.
Article VI of the Company's Bylaws provides that the Company shall
indemnify a director who has been successful in the defense of any proceeding
to which he was a party or in defense of any claim, issue or matter therein
because he is or was a director of the Company, against reasonable expenses
incurred by him in connection with such defense.
The Company's Bylaws also provide that the Company is required to
indemnify any director, officer, employee or agent made a party to a proceeding
because he is or was a director, employee or agent against liability incurred
in the proceeding if he acted in a manner he believed in good faith or to be in
or not opposed to the best interests of the Company and, in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Determination concerning whether or not the applicable standard of
conduct has been met can be made by (a) a disinterested majority of the Board
of Directors, (b) a majority of a committee of disinterested directors, (c)
independent legal counsel, or (d) an affirmative vote of a majority of shares
held by disinterested stockholders. No indemnification may be made to or on
behalf of a director, officer, employee or agent (i) in connection with a
proceeding by or in the right of the Company in which such person was adjudged
liable to the Company or (ii) in connection with any other proceeding in which
such person was adjudged liable on the basis that personal benefit was
improperly received by him.
The Company may, if authorized by its stockholders by a majority of
votes which would be entitled to be cast in a vote to amend the Company's
Articles of Incorporation, indemnify or obligate itself to indemnify a
director, officer, employee or agent made a party to a proceeding, including a
proceeding brought by or in the right of the Company.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses expected to be incurred
in connection with the issuance and distribution of the securities being
registered, other than the underwriting discounts and commissions. All of the
amounts shown are estimated except for the registration fees of the Securities
and Exchange Commission.
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . $ 2,424
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . $ 576
Printing and Engraving Expenses . . . . . . . . . . . . . $ 3,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . $ 16,000
Accounting Fees and Expenses . . . . . . . . . . . . . . $ 5,000
Advertising . . . . . . . . . . . . . . . . . . . . . . . $ 3,500
Mail and Distribution . . . . . . . . . . . . . . . . . . $ 5,000
Entertainment . . . . . . . . . . . . . . . . . . . . . . $ 5,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . $ 1,000
----------
Total . . . . . . . . . . . . . . . . . . . . . $ 41,500
==========
</TABLE>
II-1
<PAGE> 59
Item 26. Recent Sales of Unregistered Securities.
Not applicable.
Item 27. Exhibits and Financial Statement Schedules.
The following exhibits are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ --------------------------------------------------------------------------------------
<S> <C> <C>
*3.1 - Articles of Incorporation of the Company.
*3.2 - Articles of Incorporation of the Company, as amended.
*3.3 - Amended and Restated Articles of Incorporation of the Company.
*3.4 - Bylaws of the Company.
4.1 - Specimen Common Stock Certificate.
5.1 - Opinion of Smith, Gambrell & Russell, LLP.
*10.1 - Employment Agreement dated February 21, 1997 between the Company and William L. Daniel.
*10.2 - Option Agreement together with Contract for Sale of Property dated February 4, 1997 by
and between the Company and Fred Eugene Smith for the property located at the
Intersection of Highway 138 and Miller's Chapel Road, Conyers, Georgia.
*10.3 - Option Agreement together with Purchase and Sale Agreement dated January 14, 1997 by and
between the Company and Colony Properties for the property located at 1600 Highway 20
North, Conyers, Georgia.
23.1 - Consent of Smith, Gambrell & Russell, LLP (contained in their opinion at Exhibit 5.1).
23.2 - Consent of Bricker & Melton, P.A.
*24 - Power of Attorney (included in original signature page to this Registration Statement).
</TABLE>
- -----------------------
* Previously filed.
II-2
<PAGE> 60
Item 28. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration
Statement to:
(i) Include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a
fundamental change in the information in the
registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities
offered (if the total dollar value of securities
offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and
(iii) Include any additional or changed material information
on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement
of the securities offered, and the offering of the securities
at that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 61
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements of filing on Form SB-2 and has authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Conyers, State of Georgia, on the 19th day of May, 1997.
ROCKDALE NATIONAL BANCSHARES, INC.
By: /s/ William L. Daniel
----------------------------------------
William L. Daniel
President and Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities
and on the dates stated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael P. Jones Chairman and Director May 19, 1997
- ----------------------
Michael P. Jones
/s/ William L. Daniel President and Chief Executive Officer May 19, 1997
- ----------------------- (Principal Executive Financial
William L. Daniel and Accounting Officer) and Director
/s/ C. Dean Alford Director May 19, 1997
- --------------------
C. Dean Alford
/s/ Hazel E. Durden Director May 19, 1997
- ---------------------
Hazel E. Durden
/s/ John A. Fountain, M.D. Director May 19, 1997
- ----------------------------
John A. Fountain, M.D.
/s/ Julia W. Morgan Secretary and Director May 19, 1997
- ---------------------
Julia W. Morgan
/s/ R. Flynn Nance D.V.M. Director May 19, 1997
- ---------------------------
R. Flynn Nance, D.V.M.
/s/ Michael R. Potts Director May 19, 1997
- ----------------------
Michael R. Potts
/s/ Arthur J. Torsiglieri, Jr., M.D. Director May 19, 1997
- --------------------------------------
Arthur J. Torsiglieri, Jr., M.D.
*By: /s/ William L. Daniel
-----------------------
William L. Daniel attorney-in-fact
pursuant to powers of attorney
contained in the original signature
page of this Registration Statement
</TABLE>
<PAGE> 62
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ --------------------------------------------------------------------------------------
<S> <C> <C>
4.1 - Specimen Common Stock Certificate.
5.1 - Opinion of Smith, Gambrell & Russell, LLP.
23.1 - Consent of Smith, Gambrell & Russell, LLP (contained in their opinion at
Exhibit 5.1)
23.2 - Consent of Bricker & Melton, P.A.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
SPECIMEN
COMMON STOCK ROCKDALE NATIONAL COMMON STOCK
[NUMBER] BANCSHARES, INC. [SHARES]
INCORPORATED UNDER THE LAWS OF SEE REVERSE FOR
THE STATE OF GEORGIA CERTAIN DEFINITIONS
CUSIP 773058 10 2
THIS CERTIFIES THAT
IS THE OWNER OF:
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK
$1.00 PAR VALUE PER SHARE OF ROCKDALE NATIONAL BANCSHARES, INC.
The shares represented by this certificate are transferable only on the stock
transfer books of the corporation by the holder of record hereof, or by his
duly authorized attorney or legal representative, upon the surrender of this
certificate properly endorsed. This certificate and the shares represented
hereby are issued and shall be held subject to all the provisions of the
Articles of Incorporation of the corporation and any amendments thereto (copies
of which are on file at the Corporation's principal office), to all of which
provisions the holder by acceptance hereof, assents. The shares represented by
this certificate are not insured by the FDIC or any other government agency.
IN WITNESS WHEREOF, the duly authorized officers of this Corporation have
hereunto subscribed their names and caused the corporate seal to be hereunto
affixed.
Dated:
- -------------------------- ROCKDALE NATIONAL --------------------------
THE FASCIMILE SIGNATURE OF BANCSHARES, INC. THE FASCIMILE SIGNATURE OF
[SEAL]
- -------------------------- --------------------------
TO APPEAR HERE TO APPEAR HERE
- -------------------------- --------------------------
SECRETARY PRESIDENT
<PAGE> 2
ROCKDALE NATIONAL BANCSHARES, INC.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - _________________ Custodian ____________________
(Cust) (Minor)
under Uniform Gift to Minors Act
__________________________________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value received, _________________________________ hereby sell, assign
and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the common stock represented by the within certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
________________________________ attorney to transfer the said stock on the
books of the within-named corporation with full power of substitution in the
premises.
Dated,_______________________ X _______________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the certificate in every particular
without alteration or enlargement or any
change whatever.
SIGNATURE GUARANTEED:___________________________________________________________
<PAGE> 1
EXHIBIT 5.1
[SMITH, GAMBRELL & RUSSELL, LLP LETTERHEAD]
May 16, 1997
Board of Directors
Rockdale National Bancshares, Inc.
P. O. Box 82030
Conyers, Georgia 30208
Re: Rockdale National Bancshares, Inc. Registration
Statement on Form SB-2 800,000 Shares of Common Stock
Registration No. 333-24435
Ladies and Gentlemen:
We have acted as counsel for Rockdale National Bancshares, Inc. (the
"Company"), in connection with the proposed public offering of the shares of
its $1.00 par value Common Stock covered by the above-described Registration
Statement.
In connection therewith, we have examined the following:
(1) The Articles of Incorporation of the Company, certified by the
Secretary of State of the State of Georgia;
(2) The Bylaws of the Company, certified as complete and correct
by the Secretary of the Company;
(3) The minute book of the Company, certified as correct and
complete by the Secretary of the Company;
(4) Certificate of Good Standing with respect to the Company,
issued by the Secretary of State of the State of Georgia; and
(5) The Registration Statement, including all exhibits thereto.
Based upon such examination and upon examination of such other
instruments and records as we have deemed necessary, we are of the opinion that:
(A) The Company has been duly incorporated under the laws of the
State of Georgia and is validly existing and in good standing
under the laws of that State.
<PAGE> 2
Board of Directors
Rockdale National Bancshares, Inc.
May 16, 1997
Page 2
(B) The 800,000 shares of Common Stock covered by the Registration
Statement have been legally authorized and, when issued in
accordance with the terms described in said Registration
Statement, will be validly issued, fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus. In giving this consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, or the rules and regulations of
the Securities and Exchange Commission thereunder.
Sincerely,
SMITH, GAMBRELL & RUSSELL, LLP
/s/ Robert C. Schwartz
--------------------------------
Robert C. Schwartz
RCS:cs
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form SB-2 of our
report dated February 28, 1997, relating to the financial statements of
Rockdale National Bancshares, Inc., a development stage corporation, and to the
reference to our firm under the caption "Experts" in the Prospectus.
/s/ BRICKER & MELTON, P.A.
May 16, 1997
Duluth, Georgia
